refunding escrow deposits


refunding escrow deposits
refunding escrow deposits ( REDs)
Financial instruments similar to pre-refunding bonds. Tax law changes in 1984 restricted tax exempt pre-refundings for certain types of municipal debt including airport and convention center related debt. To circumvent those restrictions, a forward transaction, rather than a second bond issue, is used to lock in a lower cost of funding. Under this arrangement, funds dedicated to repaying higher cost debt at the next call date are held in escrow.
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( REDs)
A financial instrument involving a forward purchase contract that obligates investors to buy bonds at a certain rate when issued. The future date coincides with the first optional call date on an existing high-rate bond. In the interim, investors' money is invested in secondary market Treasury bonds. The Treasuries mature around the call date on the existing bonds, providing the money to buy the new issue and redeem ( redemption) the old one. Bloomberg Financial Dictionary

Financial and business terms. 2012.

Look at other dictionaries:

  • Refunding Escrow Deposits - REDs — A type of forward financial contract that creates an obligation for its investors to purchase a particular bond issue at a specified yield at some date in the future. The money from investors is held in escrow and is used to purchase interest… …   Investment dictionary

  • pre-refunding — ( pre re) The sale of bonds used to obtain funds that are then placed in escrow to back bonds previously issued. The first issue typically comprises bonds that were originally issued at high, fixed coupon rates and that could not be called when… …   Financial and business terms

  • advance refunding — In the context of municipal bonds, refers to the sale of new bonds (the refunding issue) before the first call date of old bonds (the issue to be refunded). The refunding issue usually specifies a rate lower than the issue to be refunded, and the …   Financial and business terms

  • REDs — refunding escrow deposits ( REDs) Financial instruments similar to pre refunding bonds. Tax law changes in 1984 restricted tax exempt pre refundings for certain types of municipal debt including airport and convention center related debt. To… …   Financial and business terms

  • REDS — refunding escrow deposits возмещаемые депозиты на счетах эскроу (залоговые счета) …   Финансово-инвестиционный толковый словарь

  • pre-re — pre refunding (pre re) The sale of bonds used to obtain funds that are then placed in escrow to back bonds previously issued. The first issue typically comprises bonds that were originally issued at high, fixed coupon rates and that could not be… …   Financial and business terms

  • пререфинансирование — Процедура, называемая на Уолл стрит pre ге, в ходе которой эмитент облигаций выпускает другие облигации для того, чтобы оплатить первый выпуск по наступлении первой даты досрочного погашения (call). Прибыль от продажи второго выпуска облигаций… …   Финансово-инвестиционный толковый словарь

  • предварительное рефинансирование — Государственные ценные бумаги, обмен государственных ценных бумаг до наступления срока их исполнения на ценные бумаги нового выпуска, срок исполнения которых наступает позже. Именно с помощью предварительного рефинансирования можно отсрочить… …   Финансово-инвестиционный толковый словарь