Glossary of Municipal Securities Terms


Obligations, also known as “put bonds” or “puttable securities,” that grant the bondholder the right to require the issuer or a specified third party acting as agent for the issuer (e.g., a tender agent) to purchase the bonds, usually at par, at a certain time or times prior to maturity or upon the occurrence of specified events or conditions. The put option or tender option right is typically available to the investor on a periodic (e.g., daily, weekly or monthly) basis. Typically, these securities are floating or variable rate securities, with the put option exercisable on dates on which the floating rate changes. These latter securities are often called “variable rate demand obligations,” or, colloquially, “lower floaters.” See: FLOATER; LOWER FLOATER; TENDER; TENDER AGENT; TENDER OPTION; VARIABLE RATE; VARIABLE RATE DEMAND OBLIGATION.


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