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.
bond-basics
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.
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.
Start with the Bond Basics
Hundreds of Terms and Concepts
State and Local Government Series Securities (SLGS)
Pronounced “slugs,” an acronym for “State and Local Government Series,” which are special United States Treasury securities sold to issuers and conduit borrowers directly by subscription from the Department of the Treasury.