Anticipation Note


DEFINITION of 'Anticipation Note'

A short-term obligation that is issued for temporary financing needs by a municipality. The principal payoff may be covered by a future longer-term bond issue, taxes or other form of revenue. These notes normally have maturities of one year or less and interest is payable at maturity rather than semi-annually.

BREAKING DOWN 'Anticipation Note'

Anticipation notes are used to meet the short-term cash flow needs of cities or states and provide a way to manage the timing mismatch between their revenues and expenses. There are four different types of anticipation notes:

1. Tax anticipation notes (TANs), used in anticipation of future tax collections
2. Revenue anticipation notes (RANs), issued with the anticipation that non-tax revenue (such as state aid) will pay the debt
3. Tax and revenue anticipation notes (TRANs), which are paid off with a combination of taxes and revenue
4. Bond anticipation notes (BANs), which function as bridge loans and are issued when the municipality expects a future longer-term bond issuance to pay off the note at maturity

  1. Tax Anticipation Note - TAN

    A short-term debt security issued by a state or local government ...
  2. Revenue Anticipation Note - RAN

    A municipal bond that is repaid with expected revenues from the ...
  3. Bond Anticipation Note - BAN

    A short-term interest-bearing security issued in advance of a ...
  4. Bridge Loan

    A short-term loan that is used until a person or company secures ...
  5. Funding Gap

    The amount of money needed to fund the ongoing operations or ...
  6. Percentage Change

    Percentage change is a simple mathematical concept that represents ...
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