| An interest-bearing promissory note to pay a specified sum of money--the principal amount-due on a specific date for a specific period of time. | |
| Any person who is the bearer of any outstanding bond registered to the bearer or not registered. Also means the registered owner of a registered bond. | |
| An optional policy purchased by the issuer to insure timely payment of principal and interest to bondholders. | |
| Designation assigned by credit rating agencies to give indication of credit quality. | |
| Resolution authorizing the issuance of securities, approving the Notice of Sale and the Official Statement. The resolution also contains the covenants and restrictions of the issue. | |
| The government specifies the required outcomes and functionality, but is not necessarily prescriptive in how this is achieved. The private sector bears the risk and the asset is transferred to government to operate upon completion. | |
| The private partner is responsible for financing the entire lifecycle of the project (design, construction, operations and maintenance) and owns and operates the project through a concession period. In addition, the private partner bears all commercial risk. The asset is then turned over to the government at the end of an agreed term. | |
| As above, except private partner retains ownership of asset. Government agrees only to purchase services for a fixed period. | |
| Bonds that are redeemable by the issuer prior to the maturity date at a specified price at or above par. | |
| The date on which all documents are finalized and signed. After an issue is declared to be closed, bond counsel authorizes the exchange of money and securities. | |
| A sale of municipal securities by an issuer in which the underwriters or syndicates of underwriters submit sealed bids to purchase the securities. This is contrasted with a negotiated underwriting. | |
| Expenses paid by the issuer related to the authorization sale and issuance of bonds or notes, such as consultants' fees, legal fees and charges, trustee's fees, printing costs, bond or note discounts, costs of credit ratings, fees and charges for execution and safekeeping of bonds or notes, and filling and recording fees. | |
| Conversion of a variable or floating interest rate to a fixed rate. May occur automatically under predetermined conditions or may occur at the option of the issuer. Optional conversion could, under certain circumstances, be called a "reissuance" by the Treasury Department. | |
| An agreement by a borrower to undertake (positive covenant) or not undertake (negative covenant) a specific action. Breaching a covenant is considered an event of default. | |
| A credit support purchased by the issuer to raise the credit rating on a debt issue. The most common credit enhancements consist of municipal bond insurance policies, direct or standby letters of credit, lines of credit and guaranteed investment contracts (GICs). | |
| A contract that gives the holder the right to purchase a specific currency at a specified price (exchange rate) within a specific period of time. | |
| Uncertainty about the rate at which revenues or costs denominated in one currency can be converted into another currency. | |
| Contract specifying a standard volume of a particular currency to be exchanged on a specific settlement date. | |
| A hedging technique to guard against foreign exchange fluctuations | |
| An agreement to swap a series of specified payment obligations denominated in one currency for a series of specified payment obligations denominated in a different currency. | |
| Moneys pledged and set aside to repay debt. May be held by the issuer or the trustee. | |
| This is the level at which the project vehicle is in breach of the lending document and the lender can call in the loan, exercise its step-in rights or enforce its security. A default can be the death of the project. Failure to pay principal or interest promptly when due | |
| A combination of the Design & Construction and Operate and Maintain. The Private contractor is also responsible for financing the projects construction. Upon completion and either before or after commissioning, the government buys the asset. The management stays with the contractor but government retains ownership. | |
| A restriction on a project company's ability to pay dividends. | |
| An enterprise such as a bank whose primary business and function is to collect money from the public and invest it in financial assets such as stocks and bonds. | |
| Institutions that provide the market function of matching borrowers and lenders or traders | |
|
| The way in which a company's assets are financed, such as short-term borrowings, long-term debt, and ownership equity. Financial structure differs from capital structure in that capital structure accounts for long-term Debt and Equity only. |
|
| An excuse for contractual non-performance due to events beyond the control of either party. These can include "acts of God" (floods, fires, earthquakes, or other natural disasters. |
| Exchange rate fixed today for exchanging currency at some future date | |
| Agreement between lender and borrower that details specific terms of the bond issuance. Specifies legal obligations of bond issuer and rights of bondholders. An indenture spells out the specific terms of a bond, as well as the rights and responsibilities of both the issuer of the security and the holder. | |
| An individual or firm that underwrites new issues of municipal securities. | |
| A state, political subdivision, agency, or authority that borrows money through the sale of bonds, notes, or certificates of participation. | |
|
| Private Partner leases an existing asset from the government for a specified time period. The asset may require refurbishment but no new assets are built. The private partner operates the asset throughout the life of the lease. |
| Bank credit facility wherein the bank agrees to lend a specified amount of funds for a limited term. | |
| The portion of the spread received by the investment banking firm allocated to structuring financing alternatives, evaluating all aspects of the financing plan, securing ratings or credit enhancements, preparing the official statement, and coordinating the financing team to prepare a new issue of securities for sale to investors. | |
| The date when the principal amount of a security becomes due and payable. | |
| An existing government asset is managed by the private sector. The contractor will be responsible for operating and maintaining the asset while providing the services to the customer. | |
| The principal amount of a bond or note due at maturity. Paying Agent - Place where principal and interest are payable, usually a designated bank or the office of the treasurer of the issuer. | |
| Legal investments of the bond proceeds as allowed under the laws of the state and by the resolution of issuance. | |
| A preliminary version of the official statement which is used by the issuer and underwriter to describe the proposed issue prior to the determination of interest rate(s) and offering price(s). Contains a description of the project, the security, the call provisions, and the financial and economic condition of the issuer. | |
| The sale of debt or equity securities directly to private investors such as institutional investors, mutual funds, insurance companies, or pension funds. | |
|
| The official report prepared by or for the issuer indicating the economic, financial, and social characteristics of the issuer and the collateralization for the bond issue. |
| The investor's right to demand repayment of principal prior to a bond's maturity. In the case of variable or floating rate debt, this right is referred to as a demand option. | |
| A system by which a bond issue is redeemed by a new bond issue under conditions generally more favorable to the issuer. | |
| Fund held by issuer or designated trustee for a portion of proceeds as required by law and the bond resolution. May not exceed 10% of the net proceeds of the bonds. Often is required on revenue bonds to maintain reasonably required reserve in the event of a shortfall in revenues to pay debt service. | |
|
| A bond payable solely from net or gross tax revenues derived from general fund revenues, tax increment revenues, or tolls, charges or rents paid by users of the facility constructed with the proceeds of the bond issue. |
| The return on a security that is free from default risk | |
| Government and the Private contractor to share any potential risks or windfalls associated with project risk. Issues such as pricing, service delivery standards and costs are pre-determined between the government and the private partner. | |
| A bond backed by the pledge of collateral, a mortgage, or other lien, as opposed to an unsecured bond, called a debenture. | |
| Creating a more or less standard investment instrument such as the mortgage pass-through security, by pooling assets to back the instrument. Also refers to the replacement of non-marketable loans and/or cash flows provided by financial intermediaries with negotiable securities issued in the public capital markets. | |
| Bonds that mature in each year over a period of years, usually at varying interest rates. | |
| A fund established by bond issuers, generally required in the bond resolution, that is increased through time for the purpose of either retiring some of the outstanding bonds before their maturity or reducing the risk of default of the bonds. | |
| The SPV is an entity created to act as the legal manifestation of a project consortium. The SPV itself has no historical financial or operating record which government can assess. | |
| Exchange rate on currency for immediate delivery. | |
| The rating of bonds on their own merits without the use of credit enhancement. | |
| A commercial banking transaction in which two or more banks participate in making a loan to a borrower. | |
| A bank designated by the issuer as the custodian of funds and official representative of bondholders. Trustees are appointed to insure compliance with the contract and represent bondholders to enforce their contract with the issuers. |
_______________________________________________________________________________