With the cold winter air hanging around, the early months of the year can often be a time of winter blues. For some municipal debt issuers, it may also be a time of continuing disclosure filing blues. We often hear that there are many pieces of information to track when preparing a filing and, even after filings are made, there is still the worry that something was missed. For example, we have seen situations where a filing was made but was not filed to all the necessary CUSIPs. Or, a financial filing did not contain all of the information that the issuer committed to provide in the Continuing Disclosure Agreement. According to the GFOA Information on Best Practices for Disclosure, even when another firm is hired to prepare and/or submit filings on behalf of the municipal issuer, "Disclosure is the responsibility of the issuer. Others may assist in preparation but the issuer is ultimately responsible for completeness and accuracy."In light of these concerns, some issuers are choosing to perform a comprehensive 15c2-12 analysis before their earliest filing due date. That way, if any material discrepancies are found, there is plenty of time to make any adjustments needed. In some cases, having an independent third party report can allow the issuer to get a full picture of how the market views their past compliance and helps to ensure that they are following best practices. As a result, they can have confidence that any representations made regarding past compliance are accurate and there will not be any surprises the next time they choose to come to market. A review should make sure to cover all of the issues, CUSIPs and obligations that must be included in the filings, so municipal financial officers can plan ahead and make sure complete filings will be made on time. Don't forget that rating changes, as with any material events, require a filing to be made within 10 business days of the event.
If an issuer has a history of non-compliance with regard to their continuing disclosure obligations it can limit their access to the capital markets. Either they might not get the terms they expect when they come to market or an underwriting firm may choose not to work with that issuer all together if the underwriter does not feel confident in their ability to make timely filings going forward. However, assessing compliance of previous disclosure undertakings does not have to be a daunting process. A thorough review of past continuing disclosures, and being proactive about future filing requirements, can remove uncertainty and give issuers of municipal debt more time to focus on other projects or, maybe even, enjoy the winter season.