Parties providing superior credit to improve the credit quality of a bond issue, and/or funds to the issuer to repurchase bonds that a bondholder may tender.
Letter of Credit
A commitment, usually issued by a commercial bank, used to guarantee payment of the payment of the Principal and Interest on a Bond Issue provided that the conditions set out in the documentation for the Letter of Credit (often called a Reimbursement Agreement) are satisfied.
Get it in Writing
Learn more about the various documents involved in a municipal securities transaction.
A contract typically seen in transactions that involve a letter of credit or a guaranty.
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.
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.