Variable Rate Demand Obligations are municipal securities in which the interest
rate resets on a periodic basis and holders are able to liquidate their security
through a “put” or “tender” feature, at par. A dealer, called a Remarketing Agent,
is responsible for reselling to new investors securities that have been tendered
for purchase by an investor. To ensure that the securities are able to be “put”
or “tendered” by a holder in the event that a Remarketing Agent is unable to remarket
the security, Variable Rate Demand Obligations typically operate with a Liquidity
Facility – a Letter of Credit or Standby Bond Purchase Agreement – that ensures
that an investor is able to liquidate their position. Information on EMMA about
Variable Rate Demand Obligations is provided by the MSRB’s Short-term Obligation
Rate Transparency (SHORT) System, which began collecting such information on April
1, 2009. Variable Rate Demand Obligation information generally is collected by no
later than 6:30 P.M. Eastern on the day that an interest rate is reset.
The following items are disclosed in connection with an interest rate reset in a
Variable Rate Demand Obligation, depending on your current view.
Date and Time of Interest Rate Reset
- shows the time and date that Remarketing Agent determined the interest rate.
CUSIP - shows the CUSIP9 number
for the Variable Rate Demand Obligation. Data is not available for a Variable Rate
Demand Obligation that does not have a CUSIP9 number.
Remarketing Agent - shows the
dealer that is responsible for reselling to new investors securities that have been
tendered for purchase by an investor. The Remarketing Agent typically also determines
the interest rate for the security at each interest rate reset.
Length of the Interest Rate Reset Period
- shows the number of calendar days that the interest rate is applicable.
Interest Rate - shows the interest
rate, expressed as a percentage. This is the interest rate that the Variable Rate
Demand Obligation will be during the applicable Interest Rate Reset Period.
Rate Type - shows how the interest
rate was determined on the specific interest rate reset date. Rate type categories
are as follows:
- (M) Maximum Rate – indicates that the interest
rate is set at the highest rate allowable as specified in official documents for
the Variable Rate Demand Obligation.
- (F) Set by Formula – indicates that the interest
rate was set pursuant to a formula specified in official documents for the Variable
Rate Demand Obligation.
- (R) Set by Remarketing Agent – indicates that
the interest rate was determined by the Remarketing Agent.
Length of Notification Period
- shows the number of calendar days that may elapse, as specified in official documents
for the Variable Rate Demand Obligation, between a holder tendering its security
and a Liquidity Facility purchasing the tendered security in the event that the
Remarketing Agent is unable to remarket the tendered security.
Minimum Denomination - shows
the minimum principal amount permissible for transactions in the security as specified
under the auction rate security program documents.
Maximum Rate- shows, if specified,
the highest interest rate as specified in official documents for the Variable Rate
Demand Obligation that could be set. If a maximum rate is specified in the program
documents, but such interest rate is the result of a formula that cannot be calculated
on the day of an interest rate reset, a value of “NC” will be shown.
Liquidity Facility- shows for
each liquidity facility applicable to the Variable Rate Demand Obligation, the type
– either a Letter of Credit or Standby Bond Purchase Agreement – and the expiration
date.