Leverage advanced refunding and save on interest

By: Dylan Wadler

Refunding bonds is a good way to save on interest costs. One smart way to use advanced bond refunding is to invest new bond proceeds into an escrow account. The proceeds can then be used to pay principal, interest, and call premiums on prior debt that is coming due more than 90 days after the issuance of the refunding bonds.

Optimizing a sufficient portfolio of securities is a key component in an advanced refunding. DBC Finance from SS&C has a refund-specific module that offers users the following security options to ensure the optimal escrow for each refunding scenario:

  • SLGS/zero SLGS: available daily; can be downloaded through the program
  • Open markets: daily open market information can be downloaded through the program; users can filter out certain open market security types from the pool of securities used
  • Cash: users can set up a full cash defeasance or define a specific cash deposit
  • PV: allows the user to solve using a known escrow yield or escrow cost to create a theoretical escrow

In addition, users have the flexibility to adjust the escrow portfolio that the program creates or to enter an already-solved portfolio which the program will use (instead of creating one).

These are only some of the ways the refund module in DBC Finance can help you. For more information about DBC Finance, download our brochure, request more information or a demonstration or email solution@sscinc.com.