Participation certificates

Participation certificates (PC)

Used in the context of general equities. Investments representing an interest in a pool of funds or in other instruments, such as foreign securities, that allow participation in the rise or fall of a security or group of securities.

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Participation certificates

1. An alternative to a government or municipal bond in which an investor buys a share in the improvements or infrastructure the government entity intends to fund. This contrasts with a bond, in which the investor loans the government or municipality money in order to make these improvements. This is used primarily when the government or municipality has a charter-mandated debt ceiling. In the United States the only entities issuing or guaranteeing participation certificates are Freddie Mac, Fannie Mae, Ginnie Mae, and Sallie Mae.

2. See: International Depository Receipt (IDR).