Continuing disclosure consists of important information about municipal bonds that arises after the initial issuance. This information generally reflects the financial health or operating condition of the state or local government as it changes over time, or the occurrence of specific events after issuance that may have an impact on the ability of the issuer to repay the bond, the value of the bond if it is bought or sold prior to its maturity, the timing of repayment of principal, and any number of other key features of the bond.
U.S. Securities and Exchange Commission (SEC) Rule 15c2-12 requires dealers, when underwriting certain types of municipal securities, to ensure that the state or local government issuing the bonds enters into an agreement to provide certain information to the Municipal Securities Rulemaking Board (MSRB) about the securities on an ongoing basis. These disclosures are made available for free to investors and the public on the MSRB’s Electronic Municipal Market Access (EMMA®) website. EMMA® is the official source for continuing disclosure documents.
Continuing disclosures are intended to assist investors in determining the suitability of a bond, as well as potential risks associated with the credit of the state or local government. This information is prepared by the state or local government or other agencies issuing the bonds. Each bond has its own unique set of continuing disclosures, and not all types of continuing disclosures apply to every bond. The financial information and operating data, which is prepared by the state or local government that issued the bond, generally reflects the evolving financial or operating condition of the issuer.
Posting of information by an issuer on EMMA® provides timely access for bondholders, potential investors and other market participants to key information useful in assessing their current holdings of municipal securities or in making investment decisions regarding potential transactions in municipal securities.
In addition to the continuing disclosures specified in SEC Rule 15c2-12, issuers, obligated persons and their agents can submit disclosures to the EMMA® website that are otherwise required by law or contract or that are made voluntarily.