Glossary of Municipal Securities Terms


short-term obligation of an issuer to repay a specified principal amount on a certain date, together with interest at a stated rate, usually payable from a defined source of anticipated revenues. Notes usually mature in one year or less, although notes of longer maturities are also issued. The following types of notes are common in the municipal market:

Bond anticipation notes (BANs) – Notes issued by a governmental unit, usually for capital projects, that are repaid from the proceeds of the issuance of long-term bonds.

Commercial paper (CP) – Short-term obligations issued by municipal entities usually backed by a line of credit with a bank that mature within 270 days. The issuer typically pays maturing principal of outstanding commercial paper with newly issued commercial paper, referred to as a “roll over,” thereby borrowing funds on a short-term basis for an extended period of time. Rate reset periods may vary from one to 270 days and different portions of a single issue of commercial paper may simultaneously have different reset periods.

Construction loan notes (CLNs) – Notes issued to fund construction of projects (typically housing projects). CLNs are repaid by the permanent financing, which may be provided from bond proceeds or some pre-arranged commitment.

Grant anticipation notes (GANs) – Notes issued on the expectation of receiving grant funds, usually from the federal government. The notes are payable from the grant funds, when received.

Revenue anticipation notes (RANs) – Notes issued in anticipation of receiving revenues at a future date.

Tax anticipation notes (TANs) – Notes issued in anticipation of future tax receipts, such as receipts of ad valorem taxes that are due and payable at a set time of year.

Tax and revenue anticipation notes (TRANs) – Notes issued in anticipation of receiving future tax receipts and revenues at a future date.


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