This is the first in a series of posts about neutral principles that make for “good” tax-advantaged bond legislation.
A good muni bond tax bill deals with refundings. For new programs, it provides the terms and conditions under which the new bonds may be refunded.
Over the long life of a project and the bonds that finance it, prevailing market interest rates are almost certain to be more favorable at some point than they were when the bonds were issued. Refinancing transactions thus have always been a part of life in our corner of the world. And so the clock will begin to tick as soon as the bonds under a new bond program are issued, and once the issuer can call the bonds, our phones will begin to ring with the question: Can we refund?
A good tax-advantaged bond program will tell issuers in clear language whether and how they can refund bonds under the program.
By Johnny Hutchinson on July 1, 2021
The Public Finance Tax Blog
Squire Patton Boggs