What Is the Blue List?

What Is the Blue List?

3 Min.

The blue list is a daily compilation of bonds currently up for sale by banks and dealers representing the offerings. The two main types of municipal bonds that would appear on the blue list are general obligation and revenue bonds. The electronic blue list provides information such as the name of the bond issuing authority, CUSIP, par value, coupon rate, and YTM.

Basics

Within the financial markets, the "blue list" is a daily compilation of tax-exempt municipal bonds currently available for acquisition. This roster primarily encompasses bonds offered for sale by banking institutions and dealers acting as intermediaries for prospective buyers.

Exploring the Blue List

The traditional blue list predominantly featured tax-exempt municipal debt securities, bearing key attributes such as notional value, interest rates, and maturity dates. Classification hinged on the issuer's default risk level, issuer type, and income payment schedule.

Two primary categories of municipal bonds were typically found on the blue list:

  1. General Obligation Bonds (GO): These bonds, issued by government entities, lack specific project revenue backing. For instance, a GO bond could fund a toll road construction project. Dedicated property taxes support some GO bonds, while others rely on general fund resources.
  2. Revenue Bonds: Revenue bonds secure principal and interest payments through revenues like sales, fuel, hotel occupancy taxes, or similar sources. In cases where a municipality acts as a conduit issuer, a third party assumes responsibility for interest and principal payments.

Electronic Blue List Details

Traditionally, the blue list did not include a bond's quality rating. With the advent of electronic listings, this information may now be available depending on the chosen platform. The electronic blue list accessible to investors today provides the following key information:

  1. Issuer: The entity responsible for issuing the bond, be it a corporation, state, municipality, or county agency.
  2. CUSIP Number: A unique identification code assigned to all registered stocks and bonds in the United States and Canada.
  3. Coupon Rate: The annual interest rate paid on the bond's face value, represented as a percentage. For instance, a 5% coupon rate implies bondholders receive $50 annually for a $1,000 face-value bond.
  4. Face Value: Also known as par value, this is the amount payable to the bondholder at maturity, barring any defaults or early bond calls by the issuer.
  5. Maturity Date: The date on which the bond matures, and the issuer pays the bondholder the face value of the investment.
  6. Yield to Maturity (YTM): An estimate of the total return an investor can expect if holding the bond until its maturity date.
  7. Purpose of Issuance: The reason for issuing the debt security, whether it be for constructing infrastructure like a bridge or generating revenue for educational institutions.
  8. Offering Entity: The name of the bank or dealer responsible for offering the bond.

Conclusion

The "blue list" serves as a vital resource within financial markets, offering a daily snapshot of tax-exempt municipal bonds available for investment. These bonds, often categorized as general obligation or revenue bonds, are now even more accessible through electronic platforms, providing comprehensive details such as the issuer's name, CUSIP number, coupon rate, face value, maturity date, and yield to maturity (YTM). This comprehensive information empowers investors to make informed decisions regarding these debt securities, ultimately contributing to the efficiency and transparency of the financial market.

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