Bond issue

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Bond issue

History[ edit ] Early days s [ edit ] Historically, municipal debt predates corporate debt by several centuries—the early Renaissance Italian city-states borrowed money from major banking families. Borrowing by American cities dates to the nineteenth century, and records Bond issue U. Officially the first recorded municipal bond was a general obligation bond issued by the City of New York for a canal in During the s, many U.

Bond issue

In the ensuing decades, rapid urban development demonstrated a correspondingly explosive growth in municipal debt.

The debt was used to finance both urban improvements and a growing system of free public education. Post Civil War[ edit ] Years after the Civil War, significant local debt was issued to build railroads.

Construction costs in for one of the largest transcontinental railroads, the Northern Pacificclosed down access to new capital. Smaller firms followed suit as well as the stock market.

The panic and years of depression that followed put an abrupt but temporary halt to the rapid growth of municipal debt. Several states wrote these restrictions into Bond issue constitutions. Railroad bonds and their legality were widely challenged, and this gave rise to the market-wide demand that an opinion of qualified bond counsel accompany each new issue.

Modern times[ edit ] When the U.

“ The bond issue was something we had to take a look at and it would be important for us to have knowledge about. ” Was this Helpful? YES NO 4 people found this helpful. Bond issues on statewide ballots. Below are statistics and analysis of bond issues that have appeared on statewide ballots since Even-numbered years historically have more statewide measures, bond issue or not, on the ballot than odd-numbered years. Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure.

The Great Depression of the s halted growth, although defaults were not Bond issue severe as in the s. Today, in addition to the 50 states and their local governments including cities, counties, villages and school districtsthe District of Columbia and U.

Another important category of municipal bond issuers which includes authorities and special districts has also grown in number and variety in recent years. The debt issues of these two authorities are exempt from federal, state and local governments taxes.

Municipal securities consist of both short-term issues often called notes, which typically mature in one year or less and long-term issues commonly known as bonds, which mature in more than one year.

Short-term notes are used by an issuer to raise money for a variety of reasons: Bonds are usually sold to finance capital projects over the longer term. The two basic types of municipal bonds are: In many cases, general obligation bonds are voter-approved.

Principal and interest are secured by revenues derived from tolls, charges or rents from the facility built with the proceeds of the bond issue.

Public projects financed by revenue bonds include toll roads, bridges, airports, water and sewage treatment facilities, hospitals and subsidized housing. Many of these bonds are issued by special authorities created for that particular purpose.

Build America Bonds Build America Bonds are a taxable municipal bond created under the American Recovery and Reinvestment Act of that carry special tax credits and federal subsidies for either the bond holder or the bond issuer. Many issuers have taken advantage of the Build America Bond provision to secure financing at a lower cost than issuing traditional tax-exempt bonds.

The Build America Bond provision, which expired on January 1,was open to governmental agencies issuing bonds to fund capital expenditures. The financed infrastructure needs vary greatly but can include schools, streets and highways, bridges, hospitals, public housing, sewer, water systems, power utilities, and various public projects.

Traditionally, municipal bonds are issued and sold to bond holders through a complex network of financial and legal professionals.

In all bond issuances, the issuer serves as the focal point and the head of the financing team, and oversees the transformation of an idea for a project into an issuance.

However, in some cases, the bond measure for a public project must first be approved by voters. If a bond measure is proposed in a local election, a Tax Rate Statement may be provided to voters, detailing best estimates of the tax rate required to levy and fund the bond.

In cases where no election is held, depending on applicable local law, voters may be entitled to petition the approval to referendum i. The issuer of a municipal bond receives a cash purchase price at the time of issuance in exchange for a promise to repay the purchasing investors, or their transferees, the bond holder over time.

Bond issue

Repayment periods can be as short as a few months although this is very rare to 20, 30, or 40 years, or even longer.When companies need to raise money, issuing bonds is one way to do it. A bond functions as a loan between an investor and a corporation.

The investor agrees to give the corporation a specific. Jan 01,  · K. UNDERSTANDING BOND DOCUMENTS by Sunita Lough and Debra Kawecki 1. Introduction In a negotiated sale, when the issuer determines that it needs to issue bonds for a project, it hires an underwriter or a team of underwriter(s) to assist the issuer in structuring the transaction.

In a conduit financing, the underwriter may be. A municipal bond, commonly known as a Muni Bond, is a bond issued by a local government or territory, or one of their agencies.

It is generally used to finance public projects such as roads, schools, airports and seaports, and infrastructure-related repairs. See also: Bond issues on the ballot. Voters of Maine cast ballots on 34 bond issues, totaling $1,,, in value, from January 1, , through January 1, All but one bond issue, an $11 million bond to expand the state's community college system, was approved.

This means that Mainers approved 97 percent of bond issues on the ballot between and Bond issues on statewide ballots. Below are statistics and analysis of bond issues that have appeared on statewide ballots since Even-numbered years historically have more statewide measures, bond issue or not, on the ballot than odd-numbered years.

Bond issues on statewide ballots. Below are statistics and analysis of bond issues that have appeared on statewide ballots since Even-numbered years historically have more statewide measures, bond issue or not, on the ballot than odd-numbered years.

What is Bond Issue? definition and meaning