Financing Instruments and Techniques

Financing Instruments and Techniques

Debt instruments enable an issuer to raise funds through an obligation to repay lenders. Common debt instruments used by state and local governments include:

  • General obligation bonds are secured through general taxing power of a jurisdiction. The issuer pays the debt service on the bond through a levy on necessary taxes on assessable property within its jurisdiction.
  • Revenue bonds are secured through specific funding sources, such as operations of a project being financed or a dedicated revenue stream.
  • Variable rate bonds can be structured for the long-term, but the interest rates are adjusted periodically (daily, monthly, etc.).
  • Derivative products are valued based on the value of other assets or interest rate levels. A common derivative product is interest rate swaps whereby a fixed-rate debt exchanges its fixed interest rate payments for variable rate payment.

Training

Infrastructure FinanceLive Training, 
  • May 30, 2015