Escrow Monitoring Services
Some issuers utilize a combination of variable rate bonds with an interest rate swap in connection with the advance refunding of prior bonds. This structure produces a fixed yield during the escrow period that is based upon certain assumptions regarding the interest rate on the variable rate bonds at the time of closing for the issue. Actual interest rates on the variable rate bonds subsequent to closing may cause the yield on the issue to vary from the originally anticipated yield. This may require a restructuring of the escrow or a deposit to a yield restricted sinking fund to correct the yield on the escrow. Pinnacle provides escrow monitoring services to calculate the yield on the bonds and compare the resulting yield to the yield on the escrow. If the escrow yield exceeds the bond yield, we work with the client to evaluate alternative escrow structures to correct the yield on the escrow.