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Premiums <br />In the current market environment, it is likely that bids received from underwriters will include <br />premiums. A premium bid occurs when the purchaser pays the City an amount in excess of the <br />par amount of a maturity in exchange for a higher coupon (interest rate). The use of premiums <br />itions, tax considerations for investors and other <br />regardless of premium. <br />A premium bid produces additional funds that can be used in several ways: <br /> The premium means that the City needs less bond proceeds and can reduce the size of the <br />issue by the amount of the premium. <br /> The premium can be deposited in the Debt Service Fund and used to pay principal and <br />interest. <br />Northland will work with City staff prior to the day of sale to determine use of premium (if any). <br />Rating <br />will not be requested for the Bonds due to the smaller size of the transaction and desired timing <br />of the bond sale. <br /> <br />Northland Securities, Inc. Page 7 <br /> <br />