Investor Relations: Too Much or Not Enough?

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By AJ Muldoon
One of today’s breakout sessions at the ACI-NA Economics and Human Capital Conference covered the topic of investor relations as it relates to airport securities.

Bervan Yeh of Goldman Sachs provided the investor’s perspective and highlighted the fact that given the recent recession and the near-disappearance of bond insurance, investors want more information than ever. Prior to the financial crisis, over 75 percent of airport bond issues were insured resulting in AAA ratings. Since the crisis, less than 10 percent of transactions carried insurance, instead relying on the entity’s underlying rating. Larger economic factors including persistent rumors of impending municipal bankruptcies also weigh heavy on investors’ minds. All of these and other factors have led investors to be more inquisitive about issuers and demand more and more information.

Kevin Civale of Stradling Yocca Carlson & Rauth and Georgeann Becker of Peck Shaffer & Williams both serve as disclosure counsel to airports and other issuers and offered differing perspectives on what and how much information issuers should provide. Kevin took the position that issuers need to be very cautious about ongoing disclosure. Many issuers feel the need to have “Investor Relations” web pages. However, practice has shown that while well intentioned, these pages tend to get out of date quickly and are rarely updated. Issuers are under no obligation to provide such a page and should ask themselves “What’s in it for me?” The liability entailed by deciding to institute an investor relations program may prove to outweigh any benefit, particularly for infrequent issuers.

Georgeann took a different tack. Her view is that, particularly for frequent market participants, having a robust investor relations program can be very important. Ongoing disclosure helps to maintain strong relationships with investors, credit facility providers, rating agencies and other stakeholders. She does caution, however, that issuers must ensure that information is accurate and must be widely and evenly disseminated to the public.