"If we don't change direction soon, we'll end up where we're going" - Professor Irwin Corey
"If we don't change direction soon, we'll end up where we're going" - Professor Irwin Corey
"Don't ever get your speedometer confused with your clock, like I did once, because the faster you go, the later you think you are." - Jack Handey, Deep Thoughts
Topics: refunding, advance refunding, negative arbitrage, escrow
Lots has been studied and even reported on the decision criteria involved in pulling the trigger on a public finance refunding. When is the right time? What bonds do I choose? What savings target do I use? The old rule of thumb that present value (pv) savings should be at least 3% of refunded par is taking some criticism which I won't repeat here. Suffice it to say it's a threshold originally conceived by bankers and as such, the bar for a "Go" decision is not very high. I personally think it's age discrimination; this calculation does have a good three decades under the belt...