Glossary term
Official Statement (OS)
An official statement is the primary disclosure document for a municipal bond offering, similar in function to a prospectus for other securities.
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What Is an Official Statement (OS)?
An official statement, or OS, is the primary disclosure document for a municipal bond offering. It describes the issuer, the bonds, repayment sources, risks, tax treatment, financial information, and other details investors need to evaluate the securities.
In municipal finance, an official statement serves a role similar to a prospectus for other securities, though the municipal market has its own disclosure framework and terminology.
Key Takeaways
- An official statement is a key disclosure document for new municipal bond issues.
- It explains bond terms, repayment sources, issuer finances, risks, and continuing disclosure commitments.
- Underwriters generally submit official statements to the MSRB for posting on EMMA.
- Investors should read the OS before buying a new municipal issue when possible.
- The OS is useful, but investors may also need continuing disclosures, trade data, ratings, and issuer updates.
What an Official Statement Includes
An official statement typically identifies the issuer, bond amount, maturity schedule, interest terms, redemption provisions, security for repayment, tax status, use of proceeds, and relevant legal matters. It may also include audited financial statements, budget information, debt tables, demographic data, and risk factors.
For revenue bonds, the OS often explains the project or revenue stream that supports repayment. For general obligation bonds, it may focus on tax base, debt limits, fiscal condition, and legal pledge. For conduit bonds, it may describe a private or nonprofit borrower rather than only a government issuer.
Sections Investors Commonly Review
Section | What It Helps Explain |
|---|---|
Bond terms | Maturities, interest rates, redemption features, and payment dates |
Security and sources of payment | How bondholders are expected to be repaid |
Risk factors | Events or conditions that could affect repayment or value |
Financial statements | Issuer or obligor financial condition |
Continuing disclosure | Future reporting commitments after issuance |
How It Fits With EMMA
The Electronic Municipal Market Access system, or EMMA, is the MSRB's free public website for municipal market disclosures and data. Investors can use EMMA to find official statements, continuing disclosures, trade prices, and other municipal bond information.
The official statement is a starting point for understanding a new issue. For bonds already trading, investors should also review more recent disclosures and market prices because the issuer's condition may have changed since issuance.
Reading Beyond the Yield
A municipal bond's yield is only one part of the decision. The OS can explain whether repayment depends on taxes, utility revenue, lease payments, project income, or another pledge. It can also show call risk, legal limits, litigation, pension exposure, or concentration in a single revenue source.
The Bottom Line
An official statement is the core disclosure document for a municipal bond offering. It helps investors understand the bond's terms, repayment sources, risks, and issuer finances before relying on yield alone.