Anticipation Note
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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. |
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Investopedia explains '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 |
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