June 9, 2014
Last week, the Louisiana legislature unanimously passed legislation (imagine that at the Federal level) requiring muni issuers in the State comply with 15c2-12 of the Securities Exchange Act. The legislation also required LA issuers to do a few other things and have their auditors make sure issuers are fulfilling their record keeping duties and review EMMA to determine if the issuer is complying with their disclosure agreements. The bill awaits Governor Jindal’s approval.
A few things to say here — first, bravo. Since the SEC can’t regulate the muni issuers, perhaps other States will follow the lead and enhance the level of disclosure and transparency. I applaud the Louisiana legislature with disclosure obligations – if you don’t have the resources to disclose to your investors (when you committed to do so) then, perhaps, you shouldn’t have issued debt in the first place. I also applaud the auditors’ ‘lobby’ for recognizing their part of the obligation is a de minimus cost. Since the auditor is supposed to be preparing the CAFR, they can take that one little extra step and drop in a statement as to their finding on the subject of compliance with disclosure obligations. While I am sure others will poke holes, I think this is a great step forward for the muni space.
One last point before I leave the topic. The June 6 edition of the Bond Buyer provided the following (which we have heard anecdotally), “Some issuers continue to file disclosures with … municipal information repositories, such as Bloomberg, but they do not file with EMMA.” Perhaps there should be a requirement that any filing with such “municipal information repositories” must be filed by such repository with EMMA or, perhaps, that such a filing does not constitute meeting the required disclosure filing. Would love to hear from you on this point.
Before delving into the heart of this week’s commentary, in case you missed it, the DIVER Geo Score for May 2014 (yes, it comes out monthly) was released last Tuesday. Click here for more information.
Trade Deficit, Europe and State GDP
Last week, I wrote a bit about GDP and worried about the fact that the US GDP contracted in the first quarter of 2014. Several media outlets placed some level of blame on, you guessed it, the weather. On a data point related to GDP, on June 4, the Commerce Department reported that the US trade deficit widened for the fourth time in five months (that’s not good). Trade with our global partners matters and impacts our GDP when our trading partners import less of our goods and services and we import more of their goods and services. Perhaps that explains the wide projections for US GDP growth of between 2% and 4%, although I wonder if the export reality is truly factored in.
Continuing with this line of thought, the June 4 WSJ that noted “the export drop suggests sluggishness in overseas economies like Europe is sapping demand abroad for American-made products and services.” (Interestingly, the EU has not blamed their economic difficulties on the weather). The article continued “