In cases where federal law rules out advance refunding, an issuer can try two other techniques for taking advantage of the current low interest rates: a forward transaction or a forward swap transaction.

In an ordinary forward transaction, the issuer locks in the rate and terms of bonds to be delivered later on. Investors receive a forward contract, which obliges them to buy the bonds when they are delivered.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.