Municipal Bond Forum
Bonds escrowed to maturity
Q
Would you please tell me the difference between “escrowed to maturity” bonds and “fully-defeased” bonds”?
A
James A. Klotz responds:
The distinctions you are making represent various characteristics of bonds that are escrowed to maturity (ETM) “with all calls defeased” and ETMs with “existing calls.”
The former have complete call protection, other than from sinking-fund calls. In certain cases, ETMs with existing calls have been retired before maturity.
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