| 来源类型 | Working Paper |
| 规范类型 | 报告 |
| DOI | 10.3386/w19459 |
| 来源ID | Working Paper 19459 |
| Advance Refundings of Municipal Bonds | |
| Andrew Ang; Richard C. Green; Yuhang Xing | |
| 发表日期 | 2013-09-19 |
| 出版年 | 2013 |
| 语种 | 英语 |
| 摘要 | Municipal bonds are often "advance refunded." Bonds that are not yet callable are defeased by creating a trust that pays the interest up to the call date, and pays the call price. New debt, generally at lower interest rates, is issued to fund the trust. Issuing new securities generally has zero net present value. In this case, however, value is destroyed for the issuer through the pre-commitment to call. We estimate that for the typical bond in an advance refunding, the option value lost to the municipality is approximately 1% of the par value not including fees. This translates to an aggregate value lost of over $4 billion from 1996 to 2009 for the bonds in our sample, which are roughly half of the universe of advance refunded bonds that traded during the period. The worst 5% of the transactions represent a destruction of $2.9 billion for taxpayers. We discuss various motives for the transaction, and argue that a major one is the need for short-term budget relief. Advance refunding enables the issuer to borrow for current operating activities in exchange for higher interest payments after the call date. We find that municipalities in states with poor governance generally destroy the most value by advance refunding. |
| 主题 | Financial Economics ; Portfolio Selection and Asset Pricing ; Financial Institutions ; Public Economics ; Taxation |
| URL | https://www.nber.org/papers/w19459 |
| 来源智库 | National Bureau of Economic Research (United States) |
| 引用统计 | |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/577133 |
| 推荐引用方式 GB/T 7714 | Andrew Ang,Richard C. Green,Yuhang Xing. Advance Refundings of Municipal Bonds. 2013. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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