How To Buy DC Water Bonds
There are two markets for municipal bonds - the primary market and the secondary market. "Primary market" refers to the initial issuance and sale of bonds by an issuer. "Secondary market" refers to the subsequent purchase and sale of bonds by bondholders after the bonds have already been issued.
Below is a general description of how to buy DC Water bonds in each market. The information provided below is not investment advice. Please contact your investment advisor for investment advice.
How to Buy DC Water Bonds - Primary Market
The District of Columbia Water and Sewer Authority (DC Water) sells its bonds in the primary market through brokerage firms to various willing purchasers, including individual investors and institutional investors, such as banks and mutual funds. A description of the step-by-step process to purchase bonds in the primary market is provided below. (Note: DC Water sometimes provides individual investors with the opportunity to place orders to purchase bonds before other investors (such as commercial banks and other institutional investors). This early order period is known as the "Retail Order Period". A benefit of the Retail Order Period is that it provides individual investors with a chance to place orders prior to institutional investors. The Retail Order Period generally occurs one or two days prior to the bond sale date. Orders from District of Columbia residents are given priority.)
Step-by-Step Process to Purchase a DC Water Bond in the Primary Market
- Have a brokerage account
DC Water does not directly sell its bonds in the primary market. Instead, DC Water sells its bonds through brokerage firms that it selects to participate in the initial bond sale (collectively, such firms are the underwriting syndicate). To buy a DC Water bond, you must have an account either with one of the participating brokerage firms or with another firm that can place an order through a participating brokerage firm.
*If you have a brokerage account, go to Step 2
If you do not have a brokerage account, you will need to open one in order to purchase bonds. The new account process may take some time to complete. Investors are encouraged to begin the process well in advance of a bond sale date. Each brokerage firm has its own requirements for opening an account.
DC Water does not endorse any particular brokerage firm and DC Water does not guarantee that any particular firm will open an account for an investor.
- Learn about the bonds
Read the preliminary official statement and/or final official statement, as applicable. Preliminary and final official statements contain detailed information about a bond offering, including a complete description of the security for the bonds, the principal repayment (maturity) dates, the interest payment dates, the credit ratings and the use of the bond proceeds. A thorough review of the complete document is essential to making an informed investment decision.
- Place your order
Contact your brokerage firm for more information about how to buy bonds during an initial offering. You may wish to discuss with your brokerage firm or investment advisor the amount you want to invest, when you would like your investment returned to you, and the interest that you would like to earn on your investment, as well as any questions you may have after examining the official statement, preliminary and/or final.
How to Buy DC Water Bonds - Secondary Market
Step-by-Step Process to Purchase a DC Water Bond in the Secondary Market
- Have a brokerage account
Bondholders sell DC Water bonds in the secondary market through brokerage firms. To buy a DC Water bond, you must have an account with a brokerage firm.
If you have a brokerage account, go to Step 2
If you do not have a brokerage account, you will need to open one in order to purchase bonds. The new account process may take some time to complete. Each brokerage firm has its own requirements for opening an account.
DC Water does not endorse any particular brokerage firm and DC Water does not guarantee that any particular firm will open an account for an investor.
- Learn about the bonds
Read the final official statement for the series of bonds that you are considering. Click here for information on how to access final official statements for bonds that have already been issued. A final official statement contains detailed information about bonds at the time of initial offering. Because a final official statement speaks as of its date, the information will not be current as of the date of purchase in the secondary market.
Review any continuing disclosure information for the bonds you are considering. Click here for information on how to access continuing disclosure information. Continuing disclosure information consists of certain updates that DCWater provides on an ongoing basis after bonds are sold in the primary market. Such information notifies investors of certain important events, such as principal and interest payment delinquencies, modifications to the rights of bondholders, and rating changes.
You also may wish to review current bond prices. The Securities Industry and Financial Markets Association (SIFMA) provides a "Municipal Market At-A-Glance" overview with real time price information www.investinginbonds.com. SIFMA is responsible for its own web site and information.
- Place your order
Contact your brokerage firm for more information about how to buy bonds in the secondary market. You may wish to discuss with your brokerage firm or investment advisor the amount you want to invest, when you would like your investment returned to you, and the interest that you would like to earn on your investment, as well as any questions you may have after examining the final official statement, any continuing disclosure information and current bond prices.
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Bond ratings depend on the financial strength of the issuer and the security features of a bond, e.g., the type and availability of funds for repayment of the bonds and the bondholders' collateral in case of default. DC Water bonds payable from the same type of funds and secured by the same type of collateral might have different credit ratings due to the bonds of a particular series having credit enhancements, such as bond insurance or letters of credit, or due to escrow or reserve funds.
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The primary market refers to the purchase of bonds when they are first issued. The secondary market refers to the purchase and sale of bonds after they have been issued. There is no exchange (like the New York Stock Exchange) for municipal bonds. Purchases and sales are made "over the counter" by municipal broker-dealers.
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To view the credit ratings for Revenue Bonds of DC Water continue here
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A preliminary version of an official statement, made available prior to the sale date. The issuer replaces the preliminary official statement with a final official statement on the sale date. Not all final official statements are preceded by preliminary official statements.
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No. Bondholders may sell their bonds to another person or entity through a broker-dealer. This type of sale takes place in the "secondary market." Investors should note that buyers in the secondary market will not necessarily pay you the same amount that you paid for your bonds. Secondary market buyers will compare your bond's interest rate to the interest rates on new bond issues, or "primary market" offerings. If new bond issue interest rates are higher than the rate on your bond, the buyer may pay you less than the amount of your initial investment.
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A document that discloses material information in connection with a primary offering (an initial sale by DC Water) of bonds, including a complete description of the security for the bonds, the principal repayment (maturity) dates, the interest payment dates, the credit ratings assigned to the bonds and the use of the bond proceeds.
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A firm that buys and sells securities for its customers.
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The date on which DC Water and the underwriters of the bonds (an underwriting syndicate) establish the interest rate, yield, and price for each maturity of an issue of bonds.
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A firm that buys and sells securities for itself and for its customers.
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Preliminary and final official statements for current bond offerings:
For electronic copies, go to Current Bond Offerings to find links to preliminary and final official statements, as applicable, for current bond offerings.
For printed copies, contact your broker, investment advisor, or one of the participating brokerage firms. Go to Current Bond Offerings and look under the subheading "Participating Brokerage Firms" to view the attachment setting forth the participating brokerage firms for each current bond offering. You also may contact DC Water to request printed copies.
Final official statements for bonds that have already been issued:
The Municipal Securities Rulemaking Board ("MSRB") gathers official documents and trade data relating to municipal securities, and makes them available to the public for free on its Electronic Municipal Market Access ("EMMA") web site, www.emma.msrb.org. EMMA makes available to the public free copies of official statements received since 1990 by the MSRB from underwriters of municipal securities. EMMA also provides free access to price data for municipal securities trades reported to the MSRB since January 31, 2005. The MSRB is responsible for its own web site and information.
Continuing Disclosure Information for bonds that have already been issued:
You also may use the MSRB's EMMA web site to access continuing disclosure information (see above).
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To facilitate quick and easy purchases and sales of bonds, bond issuers often engage the services of The Depository Trust Company (DTC). DTC is a securities depository, which is just as it sounds - a place where issuers deposit securities, such as bonds. Rather than giving physical bond certificates to each purchaser, issuers deposit their bonds with DTC, and DTC, together with brokerage firms, keeps track of ownership interests by computer. This system eliminates the need to transfer a physical bond every time a sale occurs. Most, but not all, bonds use DTC. Those that do use DTC are called "book entry" bonds. When purchasing book entry bonds, be sure to review the section in the official statement that discusses book entry system procedures.
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Continuing disclosure information is disclosure information that issuers are required to provide to bondholders after the sale of certain bonds in the primary market. Such information notifies investors of certain important events, such as principal and interest payment delinquencies, modifications to the rights of bondholders, and rating changes.
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Several governmental entities regulate the municipal bond market, including the Securities and Exchange Commission (www.sec.gov) and the Municipal Securities Rulemaking Board (www.msrb.org). The Securities and Exchange Commission and the Municipal Securities Rulemaking Board are responsible for their own web sites and information.
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The date on which DC Water first pays to bondholders interest on a series of bonds. The first interest amount paid will be prorated according to the number of days from the date of the bond to the first interest payment date.
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You may contact the DC Water (DC Water or (202) 787-2167) or the trustee for your bonds. The trustee is as set forth below for certain of DC Water's widely-held bonds:
Public Utility Revenue Bonds
Wells Fargo Bank, N.A.
Corporate Trust Services
MAC-N2619-0804 - Penn Center, Suite 810
Philadelphia, PA 19103
Contact: Marvin Kierstead; (215) 861-9403
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The date on which the issuer first begins to pay off or amortize principal on the bonds.
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A "grade" given to a bond issue by a rating agency. A rating is similar in concept to a credit score. It is meant to indicate the likelihood that a bond issuer will be able to pay interest and repay principal on time based on the financial condition of the issuer and the specifics of a bond issue. For the meaning of a specific rating, contact the rating agency that assigned it and review the "ratings" section in the applicable official statement.
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A company that evaluates credit risk and provides ratings. DC Water bonds are often rated by Standard & Poor's Ratings Services, Moody's Investors Service, Inc., and Fitch, Inc
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