What are the methods of selling municipal bonds?
Municipal bonds are sold by two primary methods: the competitive sale or the negotiated sale. In a competitive sale, the issuer selects the underwriter at the time the bonds are priced by advertising for bids to be tendered by prospective underwriters at a certain time and place according to specific bidding criteria. The winning bidder is selected on the basis of the lowest effective interest rate. In a negotiated sale, the issuer selects an underwriter in advance of the sale and works with the underwriter and the financial advisor to determine the pricing structure for the issue. Rates are determined over one to two days until they are finally agreed upon between the underwriter and the issuer.
