Glossary of Municipal Securities Terms

Preface

Adapted from the State of Florida's Glossary of Municipal Bond Terms First Edition: 1985
Municipal Securities Rulemaking Board
1818 N Street, N.W., Suite 800
Washington, D.C. 20036-2491

In January 1983 the Division of Bond Finance of the State of Florida published a Glossary of Municipal Bond Terms for use by issuers and other municipal finance professionals. The Florida Glossary was prepared by the staff of the Division of Bond Finance under the leadership of William E. Sweeney, then the Director of the Division. The Division's staff was assisted in the preparation of the Florida Glossary by a wide variety of municipal professionals located throughout the country; the Florida Glossary, therefore, although clearly written for persons active in the municipal securities markets in Florida, contained a vast amount of information of general application.

In view of the quality of the Florida Glossary and its likely usefulness to municipal professionals throughout the country, the Board requested and received from the State of Florida permission to reprint this adapted edition of the Florida Glossary for circulation to the municipal securities industry generally. In preparing this revised edition, the Board worked with an industry committee to update references in the Florida Glossary and to incorporate a number of definitions of terms of secondary market trading or regulatory significance. The Board believes that this revised edition will be of interest and use to all persons active in the municipal industry, and particularly to those preparing for the Board's professional qualifications examinations.

It should be noted that the definitions contained in this Glossary address the use of a particular term in the municipal securities industry. Many of these terms are also used in other segments of the securities industry, and may have a slightly different meaning when used in those other contexts. This should be kept in mind when reviewing these definitions.

It should also be understood that the definitions contained herein do not represent definitions `'officially" adopted by the Board or any other organization; they do, however, represent the consensus of industry professionals as to the meanings of these terms.

The Board recognizes that the dynamism of the municipal securities industry and its commitment to creative growth and change will cause this Glossary to become outdated quickly. The Board hopes to update the Glossary in future editions as this becomes necessary. The Board welcomes suggestions for terms to be included in future editions, as well as comments on the definitions set forth in this edition of the Glossary.

* * *

In preparing this edition of the Glossary the Board was assisted by a subcommittee of its Professional Qualifications Advisory Committee consisting of Hunter Cade, Vice President, Howard, Weil, Labouisse, Friedrichs, Inc.; Stephen T. Carroll, Vice President, Bankers Trust Company; Paul R. Daniels, Vice President, John Nuveen & Co., Inc.; Jan L. Meyer, Vice President, Newhard, Cook & Co., Inc.; and Stephen C. Stone, Senior Vice President, Cullen/Frost Bank. William E. Sweeney, Vice President, Shearson Lehman Brothers Inc., also participated in the subcommittee's work. The Board is most appreciative of the subcommittee's efforts in preparing this revised edition for publication.

Comments on various portions of the revised Glossary were received from other members of the Advisory Committee, including Joseph Cooney, Senior Vice President, Southeast Bank, N.A.; Linda Pastore, R.W. Corby & Co., Inc.; Richard D. Sandahl, Vice President, Piper, Jaffray & Hopwood, Inc.; and Frank A. Toplikar, Vice President, Zahner & Co. Peter J. Fugiel, Assistant Vice President, and Cadmus M. Hicks, Jr., Research Analyst, both of John Nuveen & Co., Inc., reviewed and commented extensively on several drafts of the revised Glossary. Stephen J. Kenny, Vice President, Goldman, Sachs & Co., and Jack M. Schrager, Associate, Hawkins, Delafield & Wood, also reviewed and commented on the final draft. Patrice L. Berchtenbreiter, Assistant Vice President, T. Rowe Price Associates, Inc., researched information on the bond insurance organizations and contributed definitions of several terms. The Board believes that the comments and contributions of these persons were most helpful in bringing the revised Glossary to completion.

In addition to these persons, a number of other municipal professionals commented on the drafts of the original Florida Glossary. The Board wishes to acknowledge the contributions of each of these persons also; they are identified in the prefatory material to the Florida Glossary reprinted at pages v-vi below.

Donald F. Donahue, Deputy Executive Director of the Board's staff, worked to incorporate the comments and suggestions of the subcommittee and the other commentators into the final Glossary. Peter H. Murray, Assistant Executive Director, also participated in this process. Angela Desmond, General Counsel, and Diane G. Klinke, Deputy General Counsel, reviewed and commented on the final draft of the Glossary. Patricia A. Hardy prepared the various drafts of the Glossary for distribution and final publication. Doris N. Celarier supervised and ensured the successful completion of the publication process.

Preface to the State of Florida's Glossary of Municipal Bond Terms

This glossary of municipal bond terms was compiled to provide the user with a single reference to terms which are unique to public finance or are common terms with a particular meaning when used in the context of public finance. We acknowledge our indebtedness to and reliance on the published works set forth in the bibliography.

Any glossary, and this is no exception, is by its nature limited. For a more thorough understanding of the economic theories, various financial techniques and the applicable state and federal law, the reader is encouraged to carefully study the available literature and to consult with recognized experts (investment bankers, financial advisors, bond counsel, and accountants) in the field of public finance.

The Division of Bond Finance wishes to acknowledge the efforts of Phillip D. Lewis, former President of the Florida Senate, without whose foresight and support the Uniform Local Government Financial Management and Reporting Act would not have been adopted in Florida. It is pursuant to the duties and responsibilities as provided in the Act that the Division of Bond Finance has drafted and published this glossary.

The preparation of the glossary was enhanced by the helpful comments, criticisms, and suggestions of many people involved with public finance. The persons and organizations to whom the editors are particularly indebted include: Arch W. Roberts, Arch W. Roberts & Co.; Nancy G. Linnan, Assistant Deputy Attorney General, State of Florida; Ernest Ellison, Auditor General, State of Florida; Staats M. Pellett, Bessemer Trust Company; Howard W. Whitaker, Jr., Brown, Wood, Ivey, Mitchell o8c Petty; W. Robert Olive, Bryant, Miller and Olive; Charles J. Wolfe, Jr., The Chase Manhattan Bank, N.A.; Michael Basile, General Counsel, Comptroller's Office, State of Florida; Bill Erickson, Finance Director, Dade County, Florida; Frances N. Millett, Deputy Commissioner, Department of Education, State of Florida; James A. Zingale, Director, Economics & Demographic Research Division, Joint Legislative Management Committee, State of Florida; William W. Fish, Donaldson, Lufkin & Jenrette Securities Corporation; David Fischer and Donald E. Burke, Fischer, Johnson, Allen & Burke, Inc.; John L. Carhuff, The First Boston Corporation; Albert F. Blaylock, First Interstate Bank of California; William D. King, Foley, Lardner & Slade; John F. Kelly and Peter L. Dame, Freeman, Richardson, Watson & Kelly, P.A.; Betty Steffens, General Counsel, Governor's Offlce, State of Florida; C. Parkhill Mays, Jr., William R. Mayer and Kerry M. Wilson, Holland & Knight; Charles D. Smith, William R. Hough & Co.; Sandra Anderson, Legislative Analyst, House Committee on Finance and Tax, State of Florida; Daniel U. Livermore, Jr., Livermore, Klein & Lott, P.A.; Robert A. Meyer, Merrill Lynch White Weld Capital Markets Group; Claire Cohen and Sylvan Feldstein, Moody's Investors Service; William P. Hansen, Jr., Morgan Guaranty Trust Company of New York; Walter E. Breen, Mudge Rose Guthrie & Alexander; Leon J. Karvelis, Jr., Municipal Bond Insurance Association; Christopher Taylor and Donald F. Donahue, Municipal Securities Rulemaking Board; H. Gilmer Nix, H.G. Nix, Incorporated; Richard Morris, Northern Trust Company; Frederick M. Bryant, Pennington, Wilkinson, Gary and Dunlap; Clifford Hinkle, Robinson-Humphrey/American Express Inc.; John O'Brien, Salomon Brothers Inc.; Peter Trent and Arnold L. Greenfield, Shearson/American Express Inc.; James J. Goodwin, Southeast Bank, N.A.; Hyman C. Grossman, Standard & Poor's Corporation; E.J. Yelton, State Board of Administration, State of Florida; Keith Quinney and Tom Woolsey, Steel Hector & Davis; and John L. Glenn, Sun Bank, N.A. We would also like to thank the Advisory Council to the Division of Bond Finance, as well as the following members of the Division of Bond Finance staff: Jane Berry; Betty Goodson; Carolyn James; Evelyn McCall; Robert Niro; Raymond Petty; Maxine Robinson; Wilma Sanders; Horace Schow 11; Thelma Slosek; and Charles W. Tullos, Jr.

The foregoing are, of course, in no way accountable for imperfections which may have survived their efforts.

Finally, the editors wish to express our sincere appreciation to Ms. Bobbie Callaway for her excellent technical assistance in the preparation of the manuscript.

William E. Sweeney, Editor
Lucy H. Harris, Assistant Editor
Thomas A. Beenck, Assistant Editor
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