Glossary of Municipal Securities Terms

PLANNED AMORTIZATION CLASS BOND (PAC BOND)

A mortgage-backed bond payable with a fixed sinking fund schedule structured so that mortgage repayments will be sufficient to make all sinking fund payments as scheduled. Typically, one or more additional classes of mortgage-backed securities, also subject to mortgage repayments, are issued in conjunction with PAC Bonds. These additional classes are subject to more volatile rates of repayment, depending upon various factors. See: COLLATERALIZED MORTGAGE OBLIGATION; PREPAYMENT SPEED.

Search the Glossary

 

Browse Terms by Letter