Series 52: 1.5.1. Anticipation Notes

1.5.1. Anticipation Notes

Municipal notes are called anticipation notes because they are issued in anticipation of an expected source of income that will make the periodic payments on a bond. Anticipation notes allow a project to get underway before its funding has been received.

Notes are issued by different names, depending on where the anticipated receipts are coming from, whether from taxes, grants, or fees. Like any cash advance, municipal notes are meant to smooth out cash flows until income is received. They are tax-exempt to the note holders.

Tax Anticipation Notes (TANs). Tax anticipation notes may be used when there is a short-term funding gap for a project funded by GO bonds. TANs are issued to finance the project’s current operations in anticipation of future tax receipts. TANs have first claim on any tax collections before they are otherwise dis