Most hospitals know that the Municipal Securities Rulemaking Board now requires them to post continuing financial disclosure to the EMMA web portal. What many have yet to realize is that EMMA (which stands for Electronic Municipal Market Access) can be a very effective tool for quickly gathering information on peers and competitors.
Before EMMA, tax-exempt hospitals and other municipal borrowers would send official statements and financial reports to one or more of five duplicative NRMSIRs (Nationally Recognized Municipal Securities Information Repositories, pronounced "nirm-zirs"). NRMSIRs were so problematic for bondholders that the MSRB decided a new system was needed. EMMA was launched in June 2009, ostensibly to streamline the continuing disclosure process and improve market transparency.
In part because its usage is mandatory, EMMA has become a powerful market intelligence tool for anyone looking for competitive information on hospitals and health systems. EMMA´s database can be searched by CUSIP (a unique number given to U.S. securities) or, for those of us who haven´t yet memorized the 8+ million CUSIPs in circulation today, searched by Issuer or Obligor (aka Borrower). Since healthcare issuers are generally distinct from borrowers, most visitors start their search in the Issue Description/Obligor field. Adding a state helps keep search results to a manageable level.
For each hospital bond issue found on EMMA, visitors can retrieve three types of information:
- Official Statements: appendix A includes borrower description, management, operations, financials, and anything else that underwriter´s counsel thinks needs to be disclosed to bondholders (and these days, that´s quite a lot).
- Continuing Disclosure: the latest financial and operating information, which depends on each hospital CDU (Continuing Disclosure Undertaking); generally includes annual and quarterly financial statements. Visitors who can provide a specific CUSIP can sign up to receive email alerts of future disclosure
- Trade Activity: the price at which investors are buying and selling specific bonds; updated daily. Discounts provide an insight on hospital-specific credit events as well as the current interest rate environment and industry outlook.
There are a few caveats to EMMA. First, disclosure before July 2009 is voluntary, and many borrowers have not posted all prior disclosure. Second, because some borrowers fail to link their continuing disclosure with all their bonds, some bonds may not have the associated disclosure information. Third, continuing disclosure is a contract between borrowers and bondholders, and some hospitals have weak CDUs (or no CDU at all), so there won´t be anything on EMMA.
EMMA has a couple of video tutorials on how to submit and retrieve information, but not much guidance on the Advanced Search feature. If you need help, call us at (888) 699-4830 and we´ll take you or your staff through the steps involved. The EMMA website can be found at http://emma.msrb.org.
This material is intended for general information purposes only and does not constitute legal advice. For legal issues, readers should consult legal counsel. To discuss this article or municipal advisory services, email or call 888-699-4830. HFA Partners, LLC is an Independent Registered Municipal Advisor registered with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) under the Dodd-Frank Act of 2010.
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