The blue list is a bonds daily compilation by banks and dealers representing the offerings currently up for sale. The municipal bonds two main types on the blue list are general obligation and revenue bonds. The electronic blue list provides information such as the name of the bond issuing authority, CUSIP, par value, coupon rate, and YTM.
Basics
The financial markets understand the "blue list" as a tax-exempt municipal bonds daily compilation currently available for acquisition. Primarily, such roster encompasses bonds offered for sale by banking institutions and dealers acting as intermediaries for prospective buyers.
Exploring the Blue List
The traditional blue list features tax-exempt municipal debt securities, bearing such key attributes as notional value, interest rates, and maturity dates. The classification hinged on the issuer default risk level, issuer type, and income payment schedule.
Two primary categories of municipal bonds are typically found on the blue list:
- General Obligation Bonds (GO): These government entities-issued bonds lack specific project revenue backing. For instance, a GO bond is issued to fund a toll road construction project. Some GO bonds are backed by dedicated property taxes, while others rely on general resources funding.
- Revenue Bonds: Revenue bonds secure principal and interest payments through revenues from sales, fuel, hotel occupancy taxes, or similar sources. In cases where municipality acts as a conduit issuer, a third party assumes responsibility for so principal as interest payments.
Electronic Blue List Details
Initially, the blue list did not include a bond quality rating. With the electronic listings advent, this information may now be available depending on the chosen platform. The electronic blue list accessible to investors today provides the following key information:
- Issuer: The entity responsible for issuing the bond, be it a corporation, state, municipality, or county agency.
- CUSIP Number: A unique identification code assigned to all registered stocks and bonds issued in the United States and Canada.
- Coupon Rate: The annual interest rate paid on the bond's face value, represented as a percentage. For instance, a 5% coupon rate implies bondholders receive $50 annually for a $1,000 face-value bond.
- Face Value: Also known as par value, this is the amount payable to the bondholder at maturity, barring any issuer defaults or early bond calls.
- Maturity Date: The date on which the bond matures, and the issuer pays the bondholder the investment face value.
- Yield to Maturity (YTM): A total return estimate an investor can expect if holding the bond until its maturity date.
- Purpose of Issuance: The reason for issuing the debt security, whether it be for constructing infrastructure (e.g. a bridge) or generating revenue for educational institutions.
- Offering Entity: The name of the bank or dealer responsible for offering the bond.
Conclusion
The "blue list" serves as a vital resource within financial markets, offering a daily snapshot of tax-exempt municipal bonds available for investment. These bonds, often categorized as general obligation or revenue bonds, are now even more accessible via electronic platforms, providing comprehensive details such as the issuer's name, CUSIP number, coupon rate, face value, maturity date, and yield to maturity (YTM). This comprehensive information empowers investors to make informed decisions regarding these debt securities, ultimately contributing to the financial market efficiency and transparency.