Glossary of Municipal Securities Terms

DEBT SERVICE RESERVE FUND REQUIREMENT

The amount required by the bond contract to be maintained in the debt service reserve fund. A typical debt service reserve fund requirement (sometimes referred to as the “reserve fund requirement” or “reserve requirement”) might be a fixed percent of the outstanding par value or the maximum annual debt service of the issue. The size and investment of the debt service reserve fund generally is subject to arbitrage regulations. See: FLOW OF FUNDS – Debt Service Reserve Fund.

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