...Tender option bond (TOB) programs were developed to create synthetic short-term paper with a put feature that makes it eligible for money market funds. In a typical TOB structure, a fixed-rate bond or note is deposited into a trust. The trust issues two new securities: receipts that bear interest at a variable rate and have a tender option; and an inverse floating-rate or residual interest receipt with no tender option (residual receipt). The original issuer of the deposited securities plays no role in issuing the TOB; the transaction occurs in the secondary market. If the structure meets criteria described herein, the floating-rate receipts can be assigned long- and short-term ratings. The long-term rating is equal to the Fitch rating of the deposited bonds, unless such bonds are otherwise credit enhanced. The short-term rating is based on the liquidity support provided for floating-rate receipts, as well as the long-term rating of the deposited bond, in accordance with the table in Fitch's...
