Refunding Escrow Deposits - REDs
- 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-bearing U.S. Treasuries, which are either sold or allowed to mature, providing proceeds to be invested into the new bond issue with an interest rate that is locked in with a forward contract.
Investors participate early in the new bond issue (typically municipal bond) but will temporarily receive taxable income from the Treasury held in escrow.
The issuance of REDs allows investors and underwriters to circumvent restrictions in the tax code that don't allow for certain municipal bond issues to be pre-refunded. Pre-refunding is a common strategy for issuers of municipal debt, as minor swings in interest rates can amount to millions of dollars in saved interest.
Investment dictionary.
Academic.
2012.
Look at other dictionaries:
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 … 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
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
