MSRB Says Muni Issuers Can Prioritize Favored Bond Buyers

In a report titled Issuer Considerations for Distributing Bonds: Establishing Priority of Orders, the MSRB offered an overview of how the prioritization of orders is determined and documented, and emphasized that "[i]ssuers are free to structure the priority of orders in any manner they see fit in light of their goals and objectives for the offering." The MSRB stated that it is the prerogative of an issuer to prioritize the buyers that it wishes to favor when there are competing buyers.

According to the MSRB, an issuer may elect to favor "retail" orders, but it can define retail in any manner that it chooses so that one issuer's definition of retail may be different from another's. The MSRB stated that an issuer may also favor certain underwriters over others so that, for example, it may preference sales made by minority-owned broker-dealers. The MSRB said that the priority of orders is sent out in a market plan that may be set by the issuer or agreed to with the underwriters.