Credit Enhancement or Liquidity Facility Provider
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.
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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.
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Learn more about the various documents involved in a municipal securities transaction.
See Also
Reimbursement Agreement
A contract typically seen in transactions that involve a letter of credit or a guaranty.
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.
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.
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Hundreds of Terms and Concepts
Verification Report
A document that verifies the mathematical accuracy of information needed to support bond counsel’s conclusions that an advance refunding bond issue is a tax-exempt bond issue and/or that refunded bonds are defeased.