Glossary of Terms

8038 Tax Forms

Amortization Schedule:  The scheduled principal payments and the specific dates that those principal payments are due and payable.

AMT:  Alternative Minimum Tax.  Certain bonds have tax consequences under alternative minimum tax rules.

Agent Trade:  A securities trade that is executed on behalf of another party.  Typically, an agent is compensated by a fee or commission rather than a mark-up, which is common for principal trades. 

Average Coupon:  The average rate that the issuer is paying on the entire issue.  It is calculated by taking the total interest and dividing it by bond year dollars.

BAB:  Build America Bond.

BABs Compliance

BAN:  Bond Anticipation Note.

Basis Point: 1/100 of 1%.  0.01% = 1 basis point.  Often referred to as bp or bps.

Bond Flipping

Broker Dealer:  A firm that makes a market in buying and selling securities.

Build America Bonds (BABs)

Call:  See optional redemption.

Coupon:  The interest rate on a bond established at bond issuance also referred to as coupon rate or interest rate.

CUSIP:  The most common way to identify a security.  Each maturity in an issue is identified with a nine digit alpha/numeric sequence.  The CUSIP consists of a six digit base sequence unique to the issuer followed by a three digit alpha/numeric character sequence unique to each bond.  CUSIP stands for the Committee on Uniform Securities Identification Procedures. 

Dated Date:  The date on which interest begins to accrue on a new issue. 

Delivery Date:  For a new issue of securities, the date on which bonds are delivered by the issuer to the underwriter and sold to customers; also known as the closing date.

De Minimis Threshold:  The threshold, established by regulations, that applies to Build America Bonds.  In general terms, bonds trading at de minimis premiums do not violate the BAB premium rules.  De minimis is defined as ¼ of 1% multiplied by the number of years to: 1) maturity in the case of a non-callable or make-whole call bond or 2) the call for a callable bond.

EMMA: Electronic Municipal Market Access system. See also Municipal Securities Rulemaking Board.

Index Yield on Sale Date:  The yield on the relevant index on the sale date of the bonds.

Index Yield on Trade Date:  The yield on the relevant index on the date of the reported trade on the bonds.

Interest Rate:  See coupon.

Issue Price Alert:  An alert to the user that a bond has traded above the user defined price alert.

Market Adjusted Price:  The traded price of a security, adjusted for movements in the interest rate markets that apply to that security.

Market Adjusted Yield:  The yield on the traded security, adjusted for movements in the interest rate markets that apply to that security.

Market Adjusted Threshold Price: The issue price of the bond adjusted for movements in the interest rate markets.

Maturity:  The date that the final principal payment on the security is due.

Muni Price Tracker

Municipal Securities Rulemaking Board (MSRB):  An independent self-regulatory group that provides rules and guidance for municipal market activities.  MSRB operates a website that provides transparency by reporting trades in municipal securities shortly after they occur.  The website is called EMMA.

National Association of Bond Lawyers (NABL)

Optional Redemption:  Sometimes referred to as call features, redemption provisions or prepayment option, this is the provision on the bond that gives the issuer the right to take the bond away from the holder at a date prior to its maturity date. 

Original Issue Price:  The price at which at least 10% of the bonds are sold to customers.

Original Issue Yield:  The yield on the bond when issued, based on its original issue price.

Original Par Amount:  The amount of the security sold in the primary offering of the bonds.

Percent of Premium Not Explained by Market:  The amount of the premium in the reported trade that is not accounted for by interest rate changes.

Premium:  The amount of the price greater than par (or 100%).

Price Threshold:  The price at which MuniPriceTracker will send alerts to the user.  This can be an amount that exceeds the de minimis price or any price that a user wants to track.  Typically, this threshold is a price equal to or greater than the original issue price.

Safe Harbor Alert:  An alert to the user that, based on the reported trades, the maturity does not meet the 10% safe harbor issuance requirement.

Safe Harbor Trade:  A trade identified as being sold at list price.

Section 103 – Interest on State and Local Bonds

Settlement Date:  The date when delivery and payment for the exchange of a security occurs.

Total Number of Trades:  The total number of trades that have been reported to the MSRB and reported on the EMMA website.

Total Trade Premium:  The premium in dollars over and above the original issue price.

Trade Amount:  The par amount of the maturity that traded.

Trade Date/Time:  The date and time of the trade as reported by the dealer and shown on the EMMA reporting system.

Trade Price:  The dollar price at which the bonds were sold or purchased.

Trade Type:  The type of trade reported to the MSRB through the EMMA system.

Trade Yield:  The yield on the reported trade.

Unexplained Issue Premium:  The portion of the premium above that which can be explained by the movement in interest rates in the market

Yield:  The annual rate of return on the bond.  It is based on the purchase price, coupon and other terms of the bond.