Escrowed to maturity municipal bonds (ETM) bonds are another type of pre-refunded municipal bond. With escrowed to maturity municipal bonds, the money which is placed in the escrow account is used to pay principal and interest through the bond’s originally scheduled maturity date.
However, the bond issuer can still reserve the right to call the bond if conditions warrant it. This is in contrast to what people normally refer to as pre-refunded bonds which are issued so that an existing bond issue can be called before maturity.
For more definitions and explanations please visit the Learn Bonds glossary where we give the meaning of many additional bond terms.