An anticipation note is an instrument used to raise short-term financing in between larger funding rounds. The principal of an anticipation note is repaid when the anticipated larger funding round occurs.
For example, a company may issue anticipation notes to bridge liquidity needs in between its annual bond issues. When the company issues its next bonds, part of the capital raised by the bond issue is used to repay the principal of anticipation notes issued ahead of the bond.
Anticipation notes are widely used by governments to raise funding in between government bond issues. This may be the case when, for example, a municipal government is hit with an unexpected, urgent expense which has not been accounted for. The municipality can issue anticipation notes to cover the immediate expense, and repay the principal of these notes with capital it raises when it issues municipal bonds.
Tax anticipation notes are another type of anticipation note. These are often used by governments to raise short-term funding. The principal of tax anticipation notes is repaid using taxes collected the following year.
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Swiss medium-term note comparison
