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15 Cards in this Set
- Front
- Back
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Zero coupon muni bond
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Sold at deep discounts which mature at face value
-GO and revenue bonds may be issued as zero coupon bonds -Are the MOST sensitive and volatile of all muni bonds |
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Zero coupon muni bond characteristics
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-Do no pay interest
-Amount of annual accretion is determined by purchase date, purchase price and maturity date but NOT by sales price -Accretion amount is EXEMPT from Fed any maybe state, but MUST be reported -May be callable. Called at 102% of the current accreted value |
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Pricate activity bonds
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Muni bonds issued to finance PRIVATE activities such as industrial parks, housing revenue bonds and waste management.
-Interest is subject to taxation or AMT |
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Refunding bonds
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Bonds issues to pay off existing bonds
Primary reasons for refunding: 1.TO lower interest costs 2.Change the maturity of bonds 3.To liberalize the bonds indenture provisions |
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Pre-refunding and advance refunding bonds
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Muni issues new bonds whose proceeds will be invested in US govt securities to pay off bonds in the future. This sgnificantly reduces the credit risk of the o/s bonds.
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Pre-refunding
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Original issue will be redeemed within 90 days of the earliest call date,"current refund". the 'redemption price' or 'call price' can be MORE than the par value
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Advanced refunding
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Bonds are generally non-callable and are redeemed at the original maturity.The new bonds must remain o/s for 90 days.
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Advanced refunding is done to:
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1.Restructure a debt issue
2.To remove restrictive covenants 3.To reduce interest costs NOT done to pay municipalities expenses |
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Municipal notes
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ST debt instruments used for temp/interim financing
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Tax anticipation notes(TAN)
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Used to raise monies which will be paid off with TAX receipts
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Revenue anticipation notes (RAN)
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Raises $ which will be paid off when CERTAIN REVENUES are realized
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Bond anticipation notes(BAN)
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Used to raise $ which will be paid off from sale o FUTURE bonds
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Tax and revenue anticipation notes(TRAN)
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Combination of tax and revenue note
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Grant anticipaiton notes(GAN)
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Grant receive from the fed govt, generally the federal transit authority pogram for the purchases of buses, trains, ferries and vans. Grants are dependent on CONGRESSIONAL APPROPRIATION
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Other types of ST obligations of a municipality may include:
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A.Construction loan notes
B.Demand nots C.Tax exempt commercial paper. This is ST(max 270 days) and issued to: 1.raise working capital 2.cover extraordinary expenses 3.cover construction or maintenance costs *NOT issued to refund o/s bonds |
