All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association (SIFMA) from our membership and other sources believed by SIFMA to be accurate and reliable. By providing this general information, SIFMA is neither recommending investing in securities, nor providing investment advice for any investor.
Due to rapidly changing market conditions and the complexity of investment decisions, please consult your investment advisor regarding investment decisions.
Do you have specific criteria for bonds you're looking for? Let us know and we'll e-mail you bonds that fit your needs. There is no charge for this service.
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.
The price at which a buyer offers to purchase a security.
A security that is not registered in the name of an owner. As a result, it is presumed to be owned by the bearer or the person who holds it. Bearer securities are freely and easily negotiable, since ownership can be quickly transferred from seller to buyer.
Registered investment companies whose assets are invested in diversified portfolios of bonds.
The sale of a block of bonds and the purchase of another block of similar market value. Swaps may be made to achieve many goals, including establishing a tax loss, upgrading credit quality, extending or shortening maturity, etc.
Bonds that are redeemable by the issuer prior to the specified maturity date at a specified price at or above par.
The dollar amount over par that an issuer pays to an investor when a bond is called for redemption prior to maturity. Usually stated as a percentage of the principal amount called.
This is the amount of interest due and the date on which payment is to be made. In the case of registered coupons (see “Registered bond”), the interest payment is mailed directly to the registered holder. Bearer coupons are presented to the issuer’s designated paying agent or deposited in a commercial bank for collection. Coupons are generally payable semiannually.
A financing structure under which old bonds are called or mature within 90 days of the issuance of new refunding bonds.
The ratio of interest to the actual market price of the bond stated as a percentage. For example, a $1,000 bond that pays $80 per year in interest would have a current yield of 8%.
The Committee on Uniform Security Identification Procedures, which was established under the auspices of the American Bankers Association to develop a uniform method of identifying municipal, U.S. government, and corporate securities. When issued, each bond is assigned a unique CUSIP number consisting of nine alphanumeric characters.
Dated date (or issue date).
The date of a bond issue from which the bondholder is entitled to receive interest, even though the bonds may actually be delivered at some other date.
Failure to pay principal or interest when due.
The amount by which the purchase price of a bond is less than the principal amount or par value.
Bonds that are exempt from both state and federal income taxes.
This redemption is different from optional redemption or mandatory redemption
in that it occurs under an unusual circumstance such as destruction of the facility financed.
The par value (i.e., principal or maturity value) of a security appearing on the face of the instrument.
A long-term bond with an interest rate fixed to maturity.
A long-term bond for which the interest rate is adjusted periodically according to a predetermined formula, based upon specific market indicators.
Compensation paid or to be paid to borrow money, generally expressed as an annual percentage rate.
A state, political subdivision, agency or authority that borrows money through the sale of bonds or notes.
A letter from a law firm concerning the validity of a municipal bond with respect to statutory authority, constitutionality, procedural conformity and usually the exemption of interest from federal income taxes. The legal opinion is usually rendered by a law firm recognized as specializing in public borrowings, often referred to as “bond counsel.”
Limited tax bond.
A bond secured by a pledge of a tax or category of taxes limited as to rate or amount.
A measure of the ease with which a security can be sold.
The date when the principal amount of a security becomes due and payable.
Moral obligation bond.
A revenue bond which, in addition to its primary source of security, possesses a structure whereby an issuer pledges to make up shortfalls in a debt service reserve fund, subject to legislative appropriation. While the issuer does not have a legal obligation to make such a payment, the failure of the issuer to honor the moral pledge would have negative consequences
for its creditworthiness.
A bond that cannot be called either for redemption by the issuer before its specified maturity date.
Short-term bonds to pay specified amounts of money, secured by specified sources of future revenues, such as taxes, federal and state aid payments and bond proceeds.
The price at which members of an underwriting syndicate for a new issue will offer securitiesto investors.
The disclosure document prepared
by the issuer that gives in detail security and financial
information about the issuer and the bonds or notes.
A right of the issuer, at its option, to retire all or part of an issue prior to the stated maturity during a specified period of years, often at a premium.
Original issue discount.
A bond, issued at a dollar price less than par which qualifies for special treatment under federal tax law. Under that law, the difference between the issue price and par is treated as tax-exempt income rather than a capital gain, if the bonds are held to maturity.
The principal amount of a bond or note due at maturity.
Place where principal and interest are payable. Usually a designated bank or the office of the treasurer of the issuer.
The amount by which the price of a security exceeds its principal amount.
The face amount of a bond, exclusive of accrued interest and payable at maturity.
Designations used by rating services designed to give relative indications of credit quality.
A bond whose owner is registered with the issuer or its agent either as to both principal and interest or as to principal only. Transfer of ownership can only be accomplished when the securities are properly endorsed by the registered owner.
Special tax bond.
A bond secured by a special tax, such as a gasoline tax.
The date when a bond transaction is executed.
A bank designated by the issuer as the custodian of funds and official representative of bondholders. Trustees are appointed to ensure compliance with the trust indenture and represent bondholders to enforce their contract with the issuers.
Unlimited tax bond.
A bond secured by the pledge of taxes that are not limited by rate or amount.
Variable rate bond.
A long-term bond the interest rate of which is adjusted periodically, typically based upon specific market indicators.
Yield to call.
A yield on a security calculated by assuming that interest payments will be paid until the call date, when the security will be redeemed at the call price.
Yield to maturity.
A number that gives the investor the average annual yield on a security. It is based on the assumption that the security is held to maturity and that all interest received over the life of the security can be reinvested at the yield to maturity.
A bond for which no periodic interest payments are made. The investor receives one payment at maturity. The maturity value an investor receives is equal to the principal invested plus interest earned compounded semiannually at the original interest rate to maturity.