yield burning

Yield burning

A municipal bond financing method. Underwriters in advance refundings add large markups on US Treasury bonds bought and held in escrow to compensate investors while waiting for repayment of old bonds after issuance of the new bonds. Since bond prices and yields move in opposite directions, when the bonds are marked up, they "burn down" the yield, which may violate federal tax rules and diminishes tax revenues.

Yield Burning

The practice of an investor deliberately attempting to raise the price of a bond in order to reduce its yield. Because the reduction of yield reduces the tax owed on the bond, yield burning is illegal.

yield burning

Marking up the prices by underwriters and thereby reducing, or burning, the yields of bonds to be placed in escrow as part of a municipal bond refunding. Yield burning benefits the underwriters at the expense of their clients.

单词	yield burning
释义	yield burning Yield burning A municipal bond financing method. Underwriters in advance refundings add large markups on US Treasury bonds bought and held in escrow to compensate investors while waiting for repayment of old bonds after issuance of the new bonds. Since bond prices and yields move in opposite directions, when the bonds are marked up, they "burn down" the yield, which may violate federal tax rules and diminishes tax revenues. Yield Burning The practice of an investor deliberately attempting to raise the price of a bond in order to reduce its yield. Because the reduction of yield reduces the tax owed on the bond, yield burning is illegal. yield burning Marking up the prices by underwriters and thereby reducing, or burning, the yields of bonds to be placed in escrow as part of a municipal bond refunding. Yield burning benefits the underwriters at the expense of their clients.
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