The current value of your zero-coupon municipal bond, taking into account interest that has been accumulating and automatically reinvested in the bond. Often the last tranche in a CMO, the accretion bond, or Z-tranche, receives no cash payments for an extended period of time until the previous tranches are retired. While the other tranches are outstanding, the Z-tranche receives credit for periodic interest payments that increase its face value but non investment grade rating not paid out. Often the last tranche in a CMO, the accrual bond or Z-tranche receives no cash payments for an extended period of time until the previous tranches are retired.
The dollar amount of interest accrued on an issue, based on the stated interest rate on that issue, from its date to the date of delivery to the original purchaser. Interest deemed to be earned on a security but not yet paid to the investor. A CMO tranche that is currently paying principal payments to investors. A mortgage loan on which interest rates are adjusted at regular intervals according to predetermined criteria. An ARM’s interest rate is tied to an objective, published interest rate index. A financing structure under which new bonds are issued to repay an outstanding bond issue prior to its first call date.
Generally, the proceeds of the new issue are invested in government securities, which are placed in escrow. The interest and principal repayments on these securities are then used to repay the old issue, usually on the first call date. Federal Government agencies which may issue or guarantee these bonds—to finance activities related to public purposes, such as increasing home ownership or providing agricultural assistance. A sale and purchase of bonds in which the dealer places bonds with the buyer on a commission basis rather than selling bonds that the dealer owns. Legal document used principally in negotiated sales by underwriters. The document consists of the instructions, terms and acceptances, and the standard terms and conditions.
Distribution of bonds to syndicate members by the book running manager. Where the offeror of a block of bonds will only sell all of the available bonds and not only a portion of them. An alternative way of calculating income under the Internal Revenue Code. Interest on private-activity bonds issued after August 7, 1986, is used for such a calculation. Liquidation of a debt through installment payments. In the municipal market, the difference in interest earned on funds borrowed at a lower tax-exempt rate and interest on funds that are invested at a higher-yielding taxable rate. Under the 1986 Tax Act, with very few exceptions, arbitrage earnings must be rebated back to the federal government.
Transcript certificate evidencing compliance with the limitations on arbitrage imposed by the Internal Revenue Code and the applicable regulations. The interest rate structure which exists when long-term interest rates exceed short-term interest rates. Price being sought for the security by the seller. The return an investor would receive on a Treasury security if he or she paid the ask price. Asset-backed securities, called ABS, are bonds or notes backed by financial assets other than residential or commercial mortgages—an investor is purchasing an interest in pools of loans or other financial assets. Typically these assets consist of receivables other than mortgage loans, such as credit card receivables, auto loans and consumer loans.
Floating-rate tax-exempt bonds where the rate is periodically reset by a dutch auction. A separate state or local governmental issuer expressly created to issue bonds or run an enterprise, or to do both. Certain authorities issue bonds on their own behalf, such as transportation or power authorities. Authorities that issue bonds on the behalf of qualified nongovernmental issuers include health facilities and industrial development authorities. Issuer document which states the legal basis for debt issuance, and states the general terms of the financing. On a mortgage security, the average time to receipt of each dollar of principal, weighted by the amount of each principal prepayment, based on prepayment assumptions.
Smallest measure used in quoting yields on bonds and notes. For example, a bond’s yield that changed from 6. The price of a security expressed in yield, or percentage of return on the investment. A security that has no identification as to owner. It is presumed to be owned by the bearer or the person who holds it.