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 ?
Bank, rated AA-/F1+/Stable), which provides support for the subseries 2005B-4c bonds; (3) the remarketing of the subseries 2005B-4c bonds as VRDBs in the daily rate mode; and (4) the amendment and restatement of the Certificate of Determination for the bonds.
In particular, the outlook revision affected Lucas County, Ohio's series 2008D fixed-rate revenue bonds, the underlying rating (SPUR) on the county's series 2008A and B variable-rate demand bonds (VRDBs), and the SPUR on Lenawee County Hospital Finance Authority, Michigan's series 2008C VRDBs.
Many consider the use of two variable rate bond products: Auction Rate Securities (ARS) and Variable Rate Demand Bonds (VRDBs).
Bank, rated AA-/F1+/Stable) which will provide support for the subseries 2005B-4c bonds; (3) the remarketing of the subseries 2005B-4c bonds as VRDBs in the daily rate mode;(4) the amendment and restatement of the Certificate of Determination for the bonds.
The $67 million series 2015AB VRDBs are private bank placements, with a mandatory put and interest re-set in 2025.
*The series 2018 VRDBs will be supported by a letter of credit (LOC) from Barclays (expected to expire in November 2022).
Nearly all of the VRDBs are swapped to fixed rate, with a variety of counterparties.
Marist also refinanced its $13.6 million outstanding series 2000-A variable-rate demand bonds (VRDBs) with a direct placement with TD Bank (series 2016, not rated by Fitch).
Approximately $54.5 million in remaining outstanding series 2008A VRDBs is expected to be refinanced as fixed rate in this transaction.
The series 2004A VRDBs are an unsecured general obligation of the Nelson Gallery Foundation, MO.
In 2004, the Hall Family Foundation (HFF), a private philanthropic 501(c)(3) established in 1953 with a mission to support community needs in the greater Kansas City area, entered into a donation agreement with NGF, whereby HFF is responsible for the debt service on NGF's series 2004A VRDBs via periodic charitable donations.
The affirmation of the 'F1+' Short-Term rating is supported by the adequacy of Scripps Health's highly liquid resources, available to fund any remarketed puts on the $100 million series 2012B&C (converted as of Feb., 2018) weekly VRDBs. Based on Fitch's rating criteria relative to self-liquidity, Scripps Health's position of eligible cash and investments available for same-day settlement exceeds Fitch's 1.25x requirement to cover the maximum tender exposure on any given date.