WASHINGTON — The National Federation of Municipal Analysts is preparing to push home its pro-disclosure message this year in efforts to be more collaborative with other muni market groups and issue a series of educational papers, new NFMA board chair Jennifer Johnston said.
Johnston, vice president and research analyst in the municipal bond department of Franklin Templeton Investments in San Francisco, will lead the group's efforts in 2015 after becoming chairman last month. She takes the helm at a time of almost unprecedented focus on transparency in the muni market, a core issue for NFMA.
Johnston holds a Bachelor of Science degree in political science from Santa Clara University in California, as well as a master's degree in public administration from the University of San Francisco. She has worked in Franklin's muni department for all of her more than 21 years at the company, and has spearheaded its analysis of some of the most risky tax-exempt securities.
"I've led our efforts in Stockton, Detroit, and Puerto Rico as well," Johnston said.
Johnston joined the NFMA board in 2010, and has served on its executive committee for the past three years. She said she was led to the NFMA through her involvement with the California Society of Municipal Analysts, which offers its leadership the opportunity to serve on the NFMA board. Johnston said she took a leadership role with the NFMA to enhance her involvement in the muni analysis arena.
"I wanted to take it to the next level," she said.
The issue of municipal bond disclosure, a drum NFMA has been beating for all of its more than 30 year history, has arguably never been hotter than it is now. The Securities and Exchange Commission has been placing renewed focus on muni disclosure in both the primary and secondary markets through enforcement actions as well as in repeated speeches by members of the commission. Commissioner Luis Aguilar was the latest to lend his voice to that end, saying on Feb. 5 that improved muni disclosure is key to protecting investors.
Johnston said NFMA is prepared to continue bringing that message home in several ways. She said she has been happy with the strides the organization has made with education and outreach in the past year or so. The NFMA released a white paper last year covering best practices in disclosure for state general obligation debt, and has plans to release several more in the coming months which will cover local government GOs, toll road bonds, dedicated tax revenue bonds, and charter school debt.
The group also wants to take other steps to advance disclosure, and will float a new paper on bank loan disclosure in the next six months, Johnston said. Standard & Poor's released data last month showing that state and local governments of all sizes are using direct bank loans as an alternative to traditional bond financing.
The Municipal Securities Rulemaking Board has repeatedly said issuers should disclose at least the basic terms of any bank loans on EMMA, and has also warned that some loans actually can qualify as municipal securities subject to Securities and Exchange Commission and MSRB regulation. Johnston said an enhanced EMMA system, which the MSRB is working toward, would be a great central location for information about bank loans.
Johnston said feedback on the first GO paper from last year has been encouraging, and that the NFMA is also looking to ramp up its outreach and education efforts.
"Education is a real interest of mine," she said.
NFMA has an industry liaison, William Oliver, who helps to communicate the NFMAs positions at industry and issuer conferences. Johnston said NFMA would like to expand its outreach and continue to foster collaborative relationships with other muni groups, such as the Government Finance Officers Association.
"We really want to leverage that," she said.
Johnston said the key is to keep explaining not just what information analysts want and need, but why they need it.
"I think we've seen progress in that regard," she said. "What the NFMA does benefits everyone in the industry."
