Tuesday, July 23, 2013
The Dorchester District Two Board of Trustees approved the issuance of $60,000,000 in Bond Anticipation Notes (BAN) Monday night.
A BAN is a short-term interest-bearing security issued in advance of a larger, future bond issue. BANs are smaller short-term bonds that are issued by corporations and governments, such as local municipalities wishing to generate funds for upcoming projects. The issuing bodies use the bond anticipation notes as short-term financing, with the expectation that the proceeds of the larger, future bond issue will cover the anticipation notes.
Simply put, a BAN is type of loan to a school district or municipality guaranteed by taxes. In this case, the bond referendum guarantees that the BANs will be paid with the increase in millage (rate per 1/1000 of a dollar).
The next step, said Allyson Duke, director of business services, is to create a prospectus, watch the market and be ready to make a decision to sell as soon as a good offer comes in.