MSRB issues alert for direct-pay bondholders on subsidy reductions

06/13/2013 | AdvisorOne

The Municipal Securities Rulemaking Board is asking holders of direct-pay municipal bonds to educate themselves about the terms of their particular bonds to get a clear picture about whether reductions in credit subsidy payments resulting from sequestration will affect extraordinary redemption provisions of those bonds. The MSRB alert noted that while issuers are directly affected, "these reductions also have the potential to affect investors buying, selling and holding direct-pay bonds for which such subsidy payments have been reduced."

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