Debt Service Reserves

Debt Service Reserve funds are put in place as a security feature to be used to pay principal and interest payments in case an issuer cannot otherwise meet the debt obligation. If an Issuer needs to draw on the DSRF, a withdrawal is made to pay the bondholders in a timely manner. In most cases, however, these funds are deposited and stay in the account for the life of the bond. The indenture outlines what types of investments can be used in order to provide protection the bondholders, but often these funds are put into a money market or other short-term investment as a trustee default.

Since the average life of a bond issue is over 30 years, this creates a great investment opportunity. IBN utilizes a variety of strategies to leverage all permitted investments and the extended time horizon options to create a portfolio that provides optimal risk-adjusted returns.