Anticipation Note – Definition

Cite this article as:"Anticipation Note – Definition," in The Business Professor, updated April 7, 2020, last accessed October 27, 2020,


Anticipation Note

An anticipation note refers to a short-term municipal obligation issued to meet temporary financial needs. It is short-term because it has a duration of less than one year. Funds to pay of the principal of a note in the future are referred to as ‚Äúanticipated”. Future long-term, taxes, government grants, principal repaymentss, bond issues, and other forms of revenue may be used to cover the payment of principal.

A Little More on What is an Anticipation Note

Anticipation note is for meeting the state or cities’ short-term cash flow to provide means of managing the timing mismatch between its expenses and its revenues. Anticipation notes are of different types, and they include:

Revenue anticipation notes (RANs) – It is issued with hope that not-tax revenue like state or federal aid will be the one to service the debt.

Tax anticipation notes (TANs) – It is used in the expectation that there will be future collections.

Bond anticipation notes (BANs) – These one functions as bridge loans and are given out when the municipality anticipates a future longer-term bond issuance to settle the anticipating note at maturity.

Tax and revenue anticipation notes (TRAN) – These are paid off with a mixture of revenue and taxes.

Reference for ‚ÄúAnticipation Note‚ÄĚ ‚Äļ Investing ‚Äļ Investing Strategy…/anticipation-note-5196…/tax-anticipation-note-tan-4953

Academics research on ‚ÄúAnticipation Note‚ÄĚ

Municipal Securities: Some Basic Principles and Practices, Greenberg, R. D. (1977). Municipal Securities: Some Basic Principles and Practices. The Urban Lawyer, 338-363.

Tax increment financing: A potential redevelopment financing mechanism for New York municipalities, Winter, G. P. (1990). Tax increment financing: A potential redevelopment financing mechanism for New York municipalities. Fordham Urb. LJ, 18, 655.

Seeking Local Government¬†Financial¬†Integrity Through Debt Ceilings, Tax Limitations, and Expenditure Limits: The New York¬†City¬†Fiscal Crisis, the Taxpayers’ Revolt¬†‚Ķ, Gelfand, M. D. (1978). Seeking Local Government Financial Integrity Through Debt Ceilings, Tax Limitations, and Expenditure Limits: The New York City Fiscal Crisis, the Taxpayers’ Revolt, and Beyond.¬†Minn. L. Rev.,¬†63, 545.

Selling city futures: the financialization of urban redevelopment policy, Weber, R. (2010). Selling city futures: the financialization of urban redevelopment policy. Economic geography, 86(3), 251-274.  This article examines the specific mechanisms that have allowed global financial markets to penetrate deeply into the activities of U.S. cities. A flood of yield-seeking capital poured into municipal debt instruments in the late 1990s, but not all cities or instruments were equally successful in attracting it. Capital gravitated toward those local governments that could readily convert the income streams of public assets into new financial instruments and that could minimize the risk of nonpayment due to the actions of nonfinancial claimants. This article follows the case of Chicago from 1996 through 2007 as the city government subsidized development projects with borrowed money using a once-obscure instrument called Tax Increment Financing (TIF). TIF allows municipalities to bundle and sell off the rights to future property tax revenues from designated parts of the city. The City of Chicago improved the appearance of these speculative instruments by segmenting and sequencing TIF debt instruments in ways that made them look less idiosyncratic and by exerting strong political control over the processes of development and property tax assessment. In doing so, Chicago not only attracted billions of dollars in global capital but also contributed to a dangerous oversupply of commercial real estate.

Wisconsin Municipal Debt Finance: An Outlook for the Eighties, Schilling, P. R., Griggs, T. E., & Ebert, J. (1979). Wisconsin Municipal Debt Finance: An Outlook for the Eighties. Marq. L. Rev., 63, 539.

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