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Debt Limit - A statutory or
constitutional limit on the principal amount of debt that an
issuer may incur (or may have outstanding at any one time).
Debt Service - The amount
of money necessary to pay interest on an outstanding debt, the
principal of maturing serial bonds and the required
contributions to a sinking fund for term bonds.
Debt Service Reserve Fund -
A fund into which monies are paid that are required by the
trust agreement or indenture as a reserve against a temporary
interruption in the receipt of the revenues or other amounts
pledged for the payment of the bonds. A common deposit
requirement for an issue might be the maximum aggregate annual
debt service requirement for any year remaining until the bonds
Dollar Bond - A bond which
is quoted on a dollar basis, rather than the usual yield to
maturity basis applicable to most municipal bonds. Dollar bonds
are usually the term bond portion of a municipal issue.
Double-Barreled Bond - A
bond secured by the pledge of two (or more) sources of payment.
In some states a bond secured in the first instance by a user
charge (e.g., water or sewer) may be additionally secured by ad
Electric Revenue Bond - A
debt contract secured by income pledge from operations of
electricity generation and/or distribution facilities.
Escrowed-to-Maturity Bond -
A bond whose principal and interest are secured by payments
from a portfolio of U.S. Government securities held in escrow
by a trustee. Such bonds are normally rated "AAA."
Extraordinary Call - The
authorized issuer redemption of a bond prior to its first
stated call date; it is normally invoked when bond issue
proceeds cannot be utilized at economic rates. This call is
frequently exercised by issuers of housing bonds, in periods of
declining interest rates, from unexpected proceeds (e.g., when
bond-funded mortgages cannot be placed because their rates
exceed market rates).
Extraordinary Mandatory Redemption
- The requirement of an issuer of a municipal security
to call or redeem all or part of the outstanding bonds of a
particular issue upon the occurrence of certain events. For
example, the issuer may be required to call or redeem bonds
when: proceeds of an issue are not expended for the purpose of
the issue within a given time frame, when excess bond proceeds
exist after the completion of the project, or when the facility
has been substantially destroyed during construction owing to
an accident. The last situation is also known as a "calamity
call" or "catastrophe call."
Extraordinary Optional Redemption
- The right of the issuer to call or redeem an issue
of bonds upon the occurrence of certain events. For example,
the right to extraordinary optional redemption of an issue may
be exercised when mortgages are prepaid in connection with a
housing revenue bond issue.