Bond FAQs

Bond Offering FAQs

What does it mean when a bond is tax-exempt?
Tax-exempt means that, in the opinion of legal counsel, the interest you earn on the bonds is excluded from the calculation of the gross income for federal income tax purposes and is exempt from California personal income taxes. Investors should consult their brokers or other investment advisors to obtain comparisons between tax-exempt California municipal bonds and other investment alternatives. For additional information about the tax status of specific City bonds, read the "Tax Matters" section of the Official Statement for that particular bond offering.

What is a rating?
A rating is a measure of the credit quality and safety of a bond, based on the issuer's financial condition. More specifically, it is an evaluation indicating the likelihood that an issuer will be able to meet scheduled interest and principal payments as assessed by a nationally recognized rating agency. Please refer to the "Upcoming/Current Bond Offerings" and the "Financial Information & Rating Reports" sections of this website. For additional information relating to ratings, please visit How are the City's bonds rated?

Bond ratings depend upon a number of factors developed by the rating agencies that rate the bonds, and take into consideration the security features designed to insure the payment of debt service on the particular bonds. Some bonds with the same underlying credit features might have different credit ratings assigned. As of March 2012, the City's issuer credit ratings are as follows:

Moody's Investors Service: Aaa                    Standard & Poor's: AAA                    Fitch Ratings: AAA

The underlying ratings for each of the City's bonds will differ from each other and the City's issuer credit rating. See the "Current Bond Offerings" and the "Financial Information & Rating Reports" sections of this website.

How are the City's bonds issued?
The City's fixed-rate bonds are generally issued in $5,000 denominations as fully registered in book-entry bonds, without physical certificates or coupons. Bond transactions are recorded in electronic computerized book-entry form by the Depository Trust Company ("DTC"), a New York limited purpose trust company and member of the Federal Reserve System. DTC is a registered clearing agency under the Securities Exchange Act of 1934, and holds securities for participants. Purchase of the book-entry bonds under the DTC system must be made by or through the Direct Participants who will receive a credit for the bonds on DTCs computerized records. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. The Direct Participants are in turn responsible for keeping accurate records of their individual client's holdings and issuing
written transaction confirmations and periodic account statements to the individual clients. Under this system individual bondholders do not receive physical certificates representing their ownership of the bonds, but should receive account statements of their holdings from their securities broker.

What is a Preliminary Official Statement ?
Also known as a "bond prospectus", a Preliminary Official Statement is the document prepared by the City for use by the bond underwriter in offering its bonds for sale to the public. The Preliminary Official Statement contains the relevant information about the City and the bonds being issued and includes important information that a potential investor should consider before purchasing bonds. Bonds cannot be offered to investors who have not received and reviewed the Preliminary Official Statement. Please refer to the "Current Offerings" section of this website. For additional information relating to Official Statements, please visit

How can I buy the City's bonds?
Bonds issued by the City may be purchased in the primary or secondary market from brokerage firms. Bonds are offered only pursuant to a bond prospectus (Preliminary Official Statement), a copy of which is available from the City's senior managing underwriter or your broker. Please refer to the "How to Purchase Bonds" and "Issuer/Broker Contacts" sections of this website. The City is not permitted to provide investment advice. The Securities and Exchange Commission regulates securities firms, financial markets and investment advisors.

What is the pricing date?

It is the day on which an underwriter establishes the final coupon rate, yield, and price for each maturity of a bond offering. The day before the pricing date is known as the "retail order period" (ROP). The City gives the City residents and investors domiciled within the City first priority to purchase the City's bonds during the ROP. Please refer to the "How to Purchase Bonds" section of this website.

What if I want to sell my bonds prior to maturity?

Most municipal securities may be sold prior to maturity with the assistance of a brokerage firm. If an investor sells a municipal security prior to maturity, he or she may receive more or less than the original price depending on prevailing market interest rates, supply and demand, and perceived credit quality of the securities, among other variables. In addition, investors should consult a tax advisor for any tax implications.

I own the City's bonds and have questions about the bonds, who should I contact?

For topics relating to the City's bonds, including interest or principal payment and notices, please contact:

U.S. Bank, National Association
Corporate Trust Services
633 W. Fifth St., 24th Floor
Los Angeles, CA 90071
Julia Hommel
Tel: (213) 615-6024