Conduit Financing

A financing in which the Issuer issues the Bonds to finance a project to be used primarily by a third party, usually a private business (e.g., a company, nonprofit, or partnership), sometimes called a Borrower, a Conduit Borrower or a conduit obligor.  The proceeds of the Bonds are either loaned to the private business which then uses the Bond proceeds to pay for all or a portion the capital project or the financed facility is leased to the private business.  The Bonds are generally repaid by the repayments of the Borrower on the loan or the lease.  Industrial Development Bonds and Private Activity Bonds (PABs) are common types of Conduit Financings.

All the Bonds

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See Also

Conduit Bonds

Bonds issued by an Issuer in a conduit financing.

Conduit Borrower

The private business that either receives the proceeds of the tax-exempt bonds through a loan by the issuer to fund all or a portion of a capital project or leases the facility financed with the proceeds of the tax-exempt bonds.

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.

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Selling Group Agreement

An agreement sometimes used in addition to an Agreement Among Underwriters when a selling group consists of more entities than just underwriters in a syndicate.