Glossary of Municipal Securities Terms

DEBT SERVICE

The amount of money necessary to pay interest on outstanding bonds, the principal of maturing or redeemed bonds and any required contributions to a sinking fund for term bonds. This amount is also known as the “debt service requirement.” “Annual debt service” refers to the total principal and interest required to be paid in a calendar year, fiscal year, or bond fiscal year. “Total debt service” refers to the total principal and interest paid throughout the life of a bond issue. “Average annual debt service” refers to the average debt service payable each year on an issue. "Maximum annual debt service” refers to the amount of debt service for the year in which the greatest amount of debt service payments are required and is often used in calculating required reserves and in additional debt tests. See: AMORTIZATION; DEBT SERVICE SCHEDULE; LEVEL DEBT SERVICE; LEVEL PRINCIPAL.

Search the Glossary

 

Browse Terms by Letter