T

take and pay, take or pay

Under take-and-pay contracts, buyers pay only for what they receive. Under take or pay, buyers pay no matter what. The contracts feature in bond sales related to public power and other energy transactions, such as gas prepayment deals. A ruling that the take-or-pay contracts signed by participants in the Washington Public Power Supply System were invalid led to the 1983 default on $2.25 billion in bonds, still the largest in the market’s history.

See also Washington Public Power Supply System.

takedown

The takedown is the sales commission or the underwriter’s profit from a bond issue. A controversial subject in the 1990s was “Who owns the takedown?” Underwriters felt it was theirs, and issuers thought they could direct ...

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