As a hospital CFO, I often get calls from analysts saying they own our bonds and want to ask some questions. Should I return their calls?
Answer: It depends on what your bond documents specify and how well prepared you are to avoid selective disclosure, which is a situation in which material non-public information is disclosed to a single investor and not all investors.
Most bond documents do not require hospitals to respond to investor calls or written requests. If you do decide to return the call, explaining a financial statement is acceptable because it generally does not involve non-public “market-moving” information. However, bringing up a pending downgrade or a future defeasance could be used by an analyst to buy or sell bonds at a profit, so those factors should not be discussed.
To avoid selective disclosure, we recommend having an independent registered municipal advisor (IRMA) on the call to help flag topics that could lead to selective disclosure. Another option is for the hospital to hold a conference call open to all investors and post the invitation and call replay on the Electronic Municipal Market Access (EMMA). Either way, the hospital’s in-house counsel should be consulted.
This question was answered by: Pierre Bogacz, managing director and co-founder, HFA Partners, LLC, and a member of HFMA’s Florida Chapter.
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