Private Activity Bond (PAB)
The term used in the Code to describe any bond issued as part of a bond issue that meets both of the private business tests or meets the private loan financing test.
bond-basics
120% Rule
Section 147(b) of the Code states that Private Activity Bonds are not Tax-Exempt Bonds if the Weighted Average Maturity of the Bond Issue exceeds 120% of the average reasonably expected economic Useful Life of the facilities financed with the Bond proceeds.
Dive Deeper on Tax Issues
Learn more about how various aspects of tax law intersect with municipal securities.
See Also
Weighted Average Maturity
Generally, the weighted average maturity of a bond issue is the sum of the product of the issue price of each maturity of the bond issue multiplied by the number of years from the closing until that maturity date divided by the issue price of the entire bond issue.
Start with the Bond Basics
Hundreds of Terms and Concepts
Blue Sky Memorandum
Memorandum to Underwriter(s) setting forth the requirements of the state securities laws in the states where the Bonds are anticipated to be sold.