TITLE

Banker: Participants Should Understand Tender-Option Bonds

AUTHOR(S)
Hume, Lynn
PUB. DATE
May 2003
SOURCE
Bond Buyer;5/2/2003, Vol. 344 Issue 31627, p5
SOURCE TYPE
Trade Publication
DOC. TYPE
Article
ABSTRACT
According to Nat Singer, senior managing director at Bear, Stearns & Co., market participants should understand the intricacies of tender-option bond programs, even if they are not directly involved in them, because they are having an increasingly huge effect on trading and pricing in the municipal market. He has also added that tender-option bonds are growing in popularity, not only because of the simple economic benefits they produce, but also because of the huge tax benefits they provide for investment banks and other sponsors. Tender-option bonds are created in the secondary market by investment banks, commercial banks, hedge funds, insurance companies, and mutual funds. The sponsors of such programs buy long-term bonds that typically are fixed rate, and put them into trusts to create both short-term notes and residual interest.
ACCESSION #
9740714

 

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