Glossary of Municipal Securities Terms

Second Edition (January 2004)

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GAAP – See:  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

GAN – See:  NOTE – Grant anticipation notes.

GARVEE BOND – A colloquial term for a grant anticipation revenue obligation.  Garvee bonds are authorized under the National Highway System Designation Act of 1995 as a mechanism for allowing state and local agencies to issue debt for transportation projects using future federal highway funds to repay the principal, interest, and any other costs associated with the issuance of the debt.  Compare:  NOTE – Grant anticipation notes.

GASB – See:  GOVERNMENTAL ACCOUNTING STANDARDS BOARD.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) – Rules adopted by the Financial Accounting Standards Board that establish standards for preparing financial statements of an enterprise.  See:  GOVERNMENTAL ACCOUNTING STANDARDS BOARD.

GENERAL OBLIGATION BOND (G.O. BOND) – A bond that is secured by the full faith, credit and taxing power of an issuer.  General obligation bonds issued by local units of government are typically secured by a pledge of the issuer’s ad valorem taxing power; general obligation bonds issued by states are generally based upon appropriations made by the state legislature for the purposes specified.  Ad valorem taxes necessary to pay debt service on general obligation bonds are often not subject to the constitutional property tax millage limits (an “unlimited tax bond”), although in some cases such limit may exist (a “limited tax general obligation bond”).  Such bonds constitute debts of the issuer and often require approval by election prior to issuance.  In the event of default, the holders of general obligation bonds have the right to compel a tax levy or legislative appropriation.  Compare:  FULL FAITH AND CREDIT BOND; LIMITED TAX BOND; MORAL OBLIGATION BOND; REVENUE BOND; SPECIAL ASSESSMENT BOND; SPECIAL OBLIGATION BOND; SPECIAL TAX BOND.  See:  LIMITED TAX GENERAL OBLIGATION Bond; UNLIMITED TAX BOND.

GFOA – See:  GOVERNMENT FINANCE OFFICERS ASSOCIATION.

GIC – See:  GUARANTEED INVESTMENT CONTRACT.

GIFT – Under MSRB rules, any item or service of value given by a broker-dealer to any person other than the broker-dealer’s own employees, if given in connection with the municipal securities business of the recipient’s employer.  There are annual limits on such gifts.

GINNIE MAE (GOVERNMENT NATIONAL MORTGAGE ASSOCIATION) – See:  AGENCIES.

GLASS-STEAGALL ACT – A federal law enacted in 1933 that, in part, separated commercial banking from investment banking and generally precluded commercial banks from underwriting certain types of municipal revenue bonds.  Many provisions of Glass-Steagall were repealed or substantially modified by the Gramm-Leach-Bliley Act.  See:  GRAMM-LEACH-BLILEY ACT.

GLOBAL CERTIFICATE – A single certificate, sometimes referred to as a “jumbo certificate,” representing an entire maturity of an issue of securities.  Such certificates are often used in book-entry systems.  The issuer issues a global certificate that is then lodged in the facilities of a securities depository or other book-entry agent and kept safely by the agent until maturity.  The securities are available to beneficial owners only in book-entry form, and no certificates can be obtained.  Compare:  IMMOBILIZED SECURITY.  See:  BOOK-ENTRY ONLY.

GNMA (GOVERNMENT NATIONAL MORTGAGE ASSOCIATION) – See:  AGENCIES.

G.O. BOND – See:  GENERAL OBLIGATION BOND.

GOING AWAY – An indication that an order for securities (usually new issue municipal securities) is from an investor, rather than from a broker-dealer seeking to purchase the securities for trading inventory.

GOOD DELIVERY – The presentation by a broker-dealer of securities sold to a purchaser that are in acceptable form for delivery purposes under MSRB rules.  The delivery standards cover such matters as the criteria for fungibility of securities; denominations; delivery of legal opinions and other required documents; and other similar matters.  See:  EX-LEGAL; SETTLEMENT.

GOOD FAITH DEPOSIT – A sum of money or surety bond provided to an issuer of a new issue of municipal securities by an underwriter or underwriting syndicate as an assurance of performance on its offer to purchase the issue.  Good faith deposits generally are required in connection with competitive sales and sometimes in connection with negotiated sales.

GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) – A standard-setting body, associated with the Financial Accounting Foundation and comparable to the Financial Accounting Standards Board.  GASB prescribes standard accounting practices for governmental units in maintaining their financial records and releasing financial data to the public.  Compare:  FINANCIAL ACCOUNTING STANDARDS BOARD.

GOVERNMENT FINANCE OFFICERS ASSOCIATION (GFOA) – An organization of state and local government finance officers formed to improve professional standards of government fiscal and debt administration.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or GINNIE MAE) – See:  AGENCIES.

GOVERNMENT-SPONSORED ENTERPRISE (GSE) – See:  AGENCIES.

GRAMM-LEACH-BLILEY ACT – A federal law enacted in 1999 that repealed many of the provisions of the Glass-Steagall Act.  Among other things, the act permits banks, securities firms and insurance companies to become affiliated through financial holding companies.  The act also permits dealer banks to engage in a broader range of municipal securities activities than under the Glass-Steagall Act.  See:  GLASS-STEAGALL ACT.

GRANT ANTICIPATION NOTE (GAN) – See:  NOTE – Grant anticipation notes.

GROSS PLEDGE – See:  PLEDGED REVENUES.

GROSS REFUNDING – See:  ADVANCE REFUNDING.

GROSS REVENUE PLEDGE – See:  PLEDGED REVENUES.

GROSS REVENUES – See:  PLEDGED REVENUES.

GROSS SPREAD – See:  SPREAD.

GROSS UNDERWRITING SPREAD – See:  SPREAD.

GROSS-UP CLAUSE – A provision in the bond contract in which the issuer agrees to pay a higher rate of interest in the event of the occurrence of certain events, typically where interest on bonds issued as tax-exempt bonds becomes taxable.  The provision may call for a higher rate of interest for on-going payments of interest to bondholders and may also provide for a payment to bondholders intended to make the total of prior interest payments made to the bondholders equal to the amount that would have been payable had the bonds previously borne interest at the higher rate.

GROUP NET ORDER – See:  PRIORITY PROVISIONS.

GSE (GOVERNMENT-SPONSORED ENTERPRISE) – See:  AGENCIES.

GUARANTEED INVESTMENT CONTRACT (GIC) – An investment, secured by a contract with a financial institution, that guarantees a fixed rate of return and a fixed maturity.