From the Bond Buyer - Atlanta, GA (April 13, 1999)
by Robert Whalen
The Tennessee Local Development Authority is breaking new ground by electronically selling $33 million of bond anticipation notes next week.
The Ban deal, scheduled for April 22, marks the first time short-term tax- exempt debt securities will be electronically sold. Bids will be accepted through Internet-based MuniAuction Inc. Hand-delivered bids will also be accepted, but faxed bids will not.
The sale is part of the state's typical note issuance for various construction projects, and the debt will be converted into long-term bonds when building is completed, said the state's financial adviser Marlin Mosby, a managing director with Public Financial Management Inc.
According to Mosby, the finance team initially wanted to use Thomson Financial's PARITY system, but that service isn't currently programmed to accommodate a note sale. An official at Thomson confirmed that their system is unable to take note sales, but it plans to offer that option soon. Thomson is the parent company of The Bond Buyer.
The deal could also have been sold using PFM Auction, a private-label electronic bidding Website licensed by MuniAuction. However, the Internet- bidding firm wanted to retain Tennessee as one of its larger repeat clients, Mosby said. The state has used MuniAuction for two previous bond sales, he indicated.
Because note deals commonly draw scores of bidders, traditional delivery creates more paper work than a bond sale, said Myles Harrington, president of MuniAuction.
On a good day, an issuer can wade through the bids and declare the winner, or winners, in approximately thirty minutes, Harrington pointed out. By using an electronic system, that determination is made in seconds, he said.
He hopes this sale will demonstrate his system's versatility and catch the attention of other active note issuers. While using his Internet-based system should increase accessibility to the market, the largest benefit will likely be on the administrative front, he said.
Harrington is looking to add another feather to his cap Wednesday when his system -- along with PARITY -- is used to take bids on a New York City deal. He said the city sought his system because it wants to test the unorthodox maturity-by-maturity bidding option.