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Abstract: 

This paper discusses the value of regression analysis in predicting municipal bond interest rates and argues for the use of an overall interest rate measure for municipal bond pricing. It points out that debt structures interact and, although each maturity is important, even more important is the overall effect on true interest cost (TIC). Regression prediction models can be developed that accurately predict interest rates, and these predictions can be of particular use in budgeting future debt service, in evaluating strategy and individual bond issues, and in negotiating sales.The starting point for negotiated sales should be the result that would be predicted if the sale were competitively bid. This article is based on his presentation in the panel on New Research Findings in Public Finance at the National Association of Independent Public Finance Advisors (NAIPFA) Annual Conference in San Francisco, October 2–4, 2002.

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Affiliations:  1: University of Connecticut.