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 ?
The 'AA+' rating also incorporates the long-term rating on the IEFA put bonds, currently outstanding in the aggregate amount of $190.1 million, which have staggered mandatory tender dates through 2020.
EverBank plans to put bonds backed by USD308m of loans on the market according to a report by Fitch Ratings.
HCF Bank (Ba3/Withdrawn/BB-) redeemed put bonds of the 7th series in the volume of 2.6 billion rubles.
Management is weighing different options for its series 2008G put bonds.
VRDOs, also known as "put bonds," are the most popular variable rate bond and the most used by not-for-profit borrowers.
"The bond was always a part of the program, but it was tough to get people to put bonds up if we didn't have a big receiver footprint," said Weiss.
MADS reflects UChicago's uneven debt service requirements, including mandatory tenders on put bonds and bullet maturities.
This calculation excludes the $190 million of put bonds that have staggered mandatory tender dates in 2019 and 2020.
The proposed $375 million series 2018 bonds will be issued partially as fixed rate tax exempt bonds and fixed rate put bonds with a seven year term, both with final maturity in 2048.
These are --$811,305,000 Grand Parkway System subordinate tier toll revenue bonds, series 2018A (TELA supported); and --$100,000,000 Grand Parkway System subordinate tier toll revenue put bonds, series 2018B (TELA supported).
Pro forma MADS of about $264.6 million (including outstanding CP and bank notes and following remarketing of put bonds coming due in February) comes due in fiscal 2026,and represents 11.3% of fiscal 2017 unrestricted operating revenue ($2.34 billion).
Issue: General Obligation Bonds (Mandatory Put Bonds); Rating: Aa3; Sale Amount: $250,000,000; Expected Sale Date: 03/08/2016; Rating Description: General Obligation