Guarantor
The third party that executes a guaranty.
bond-basics
Guaranty
A third party’s promise to pay the Debt Service on the Bonds or perform some other obligation, which is the primary obligation of another party.
See Also
Debt Service
The amount of principal and interest required to be paid on an issue of bonds.
Credit Enhancement
The use of the credit of an entity having greater financial strength than the issuer or borrower to improve the credit quality of a bond issue.
Reimbursement Agreement
A contract typically seen in transactions that involve a letter of credit or a guaranty.
Start with the Bond Basics
Hundreds of Terms and Concepts
Escrow Fund
Trust account established in the escrow deposit agreement that holds cash, investments, usually obligations of the federal government or, sometimes, federal agencies, or both, all of which are pledged to the payment of the debt service of the refunded bonds.