Variable-rate demand note

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Variable-rate demand note

A note that is payable on demand and bears interest tied to a money market rate.

Variable-Rate Demand Note

A debt security that a holder may require the issuer to redeem before maturity. When this occurs, the issuer must pay par to the holder, and the holder loses any future coupon payments that he/she might otherwise have been due. An advantage to a variable-rate demand note from the holder's standpoint is the fact that the holder may reinvest the par value in a new bond in a time of rising interest rates. This protects the holder from certain types of interest rate risk.

Variable-rate demand notes come in two main forms. The first allows the holder to demand redemption on any of several days throughout the life of the bond, while the second only allows this on one particular day. Variable rate demand notes are also known as variable rate demand obligations, option tender bonds, or put bonds. In Canada, the most common term is a retractable bond.
References in periodicals archive ?
PremierNotes are variable rate demand notes where investors may use checks to redeem their investments on demand.
Fitch notes that lengthy tender notice and funding periods may create greater liquidity risk for MMFs relative to conventional variable rate demand notes with a seven-day tender notice.
The short-term investments that were not correctly classified are variable rate demand notes purchased by the Company in the first quarter of fiscal 2006.
The fund pursues its investment objectives by investing in a portfolio of high quality, short-term municipal obligations, which may have fixed, floating, or variable rates of interest, and typically include variable rate demand notes (VRDNs) putable to a third party financial institution in seven days or less
A year later, in March 2006, PwC again issued a document applying the same narrow logic they used on ARS to Variable Rate Demand Notes (VRDN), according to AFP's letter.
Longer term, ABCP holdings have declined, offset by rises in repos, government holdings and variable rate demand notes (VRDN).
13 million variable rate demand notes, fiscal year 2001-2002A A-1+
Supplementing existing analyses of fund composition and risk metrics, the new reporting capabilities include duration contribution by country, support providers for variable rate demand notes and other features.
These investments may have fixed, floating, or variable rates of interest, and typically include variable rate demand notes (VRDNs) putable to a third party financial institution in seven days or less, or other municipal bonds/notes.
Arizona Municipal Cash Trust will invest in municipal issues including variable rate demand notes, commercial paper, tax anticipation notes, bond anticipation notes, and other short-term instruments.
Fixed Rate Notes Series A and B and Index Notes Series C are rated 'F-1+' while Variable Rate Demand Notes Series D are rated 'F-1+/F-1+' to reflect both the state's credit and the quality of the liquidity furnished by a standby bond purchase agreement with Bank of America NT & SA, Bank of Nova Scotia, Commerzbank Aktiengesellschaft and National Westminster Bank Plc.
government securities, repurchase agreements and variable rate demand notes.

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