\n<\/p>\n
1. Link issuer sophistication to portfolio design:<\/strong> Less financially sophisticated issuers may pose greater disclosure or governance risks, but they may also use call options less efficiently. For some investors, that tradeoff may be attractive. <\/p>\n 2. Reinterpret the yield gap:<\/strong> The higher yield on a callable bond from an advisor-heavy issuer can easily offset the higher call probability. Without betting on the behavior of the issuer, yield alone can be misleading.<\/p>\n 3. Look beyond the first call date:<\/strong> The advance refund and redemption process is as important as the stated call provisions. Advisors facilitate these transactions, expanding the practical reach of call options.<\/p>\n Reference<\/strong> Brancaccio, G., and K. Kang. 2025. \u201cSearch Frictions and Product Design in the Municipal Bond Market.\u201d Econometrica 93, no. 6: 2159-2199. <\/p>\n Chen, H., Cohen, L., and Liu, W. 2024. \u201cCalling All Issuers: The Market for Debt Monitoring.\u201d Management Science 71(8): 6367\u20146391.<\/p>\n Garrett, DG 2024. “Conflicts of Interest in Municipal Bond Advice and Underwriting.” Review of Financial Studies 37, no. 12: 3835-3876.<\/p>\n Garrett, DG, and Malakar, B. 2026. \u201cThe Evolving Role of Municipal Finance Advisors in the 21st Century.\u201d Public Budget and Finance 0: 1-24. <\/p>\n Harris, LE, and MS Piwowar. 2006. \u201cSecondary Trading Costs in the Municipal Bond Market.\u201d Journal of Finance 61, no. 3: 1361-1397. Malakar, B. 2024. \u201cFiduciary Fees in the Municipal Bond Market.\u201d Municipal Finance Journal Volume 45, Numbers 2-3, Summer\u2013Fall 2024.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":" 1. Link issuer sophistication to portfolio design: Less financially sophisticated issuers may pose greater disclosure or governance risks, but they may also use call options less efficiently. For some investors, that tradeoff may be attractive. 2. Reinterpret the yield gap: The higher yield on a callable bond from an advisor-heavy issuer can easily offset the<\/p>\n","protected":false},"author":1,"featured_media":160270,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[948,1962,33823,379],"class_list":["post-160261","post","type-post","status-publish","format-standard","has-post-thumbnail","category-daily-bread","tag-blog","tag-call","tag-muni","tag-risk"],"_links":{"self":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/160261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/comments?post=160261"}],"version-history":[{"count":1,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/160261\/revisions"}],"predecessor-version":[{"id":160271,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/posts\/160261\/revisions\/160271"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/media\/160270"}],"wp:attachment":[{"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/media?parent=160261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/categories?post=160261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/christiancorner.us\/index.php\/wp-json\/wp\/v2\/tags?post=160261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Ang, A., Green, RC, Longstaff, FA, and Xing, Y. 2017. “Advance Withdrawal of Municipal Bonds.” Journal of Finance 72: 1645\u20131682.<\/p>\n
Luby, M.J., and Orr, P. 2019. “From NIC to TIC to RAY: Estimating the Lifetime Cost of Capital for Municipal Borrowers.” Journal of Municipal Finance 39(4): 29\u201345. <\/p>\n