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Bond Basics

Bond Basics. Bradley D. Viegut, Director bviegut@rwbaird.com 800-792-2473 / 414-298-7354 Fax . Bonds Defined Interest Rates. Serial Bonds Term Bonds. Interest Rate Indexes. MMD Bond Buyer 20. Types of Bonds. Repayment Pledge/Security to Bondholders. Tax Levy Authority

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Bond Basics

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  1. Bond Basics Bradley D. Viegut, Director bviegut@rwbaird.com 800-792-2473 / 414-298-7354 Fax

  2. Bonds DefinedInterest Rates • Serial Bonds • Term Bonds

  3. Interest Rate Indexes • MMD • Bond Buyer 20

  4. Types of Bonds

  5. Repayment Pledge/Security to Bondholders • Tax Levy Authority • Revenues of an Enterprise • Protective bond covenants • Flow of Funds • Additional bonds test • Minimum net operating revenues • Debt Service Reserve Fund • Service to the City • Lease Revenues

  6. Professionals Involved in a Bond Issuance Transaction

  7. Issuing a Bond

  8. Developing a Plan of Finance for Municipal Projects Example Capital Improvement Plan

  9. Funds 2011-12 CIP Funds 2013-14 CIP Funds 2015 CIP $5,080,000 $2,710,000 $1,035,000 G.O. Notes G.O. Notes G.O. Notes Dated: October 1, 2011 Dated: October 1, 2013 Dated: October 1, 2015 LEVY YEAR EXISTING PRINCIPAL INTEREST PRINCIPAL INTEREST PRINCIPAL INTEREST COMBINED COMBINED YEAR DUE DEBT (4/1) (4/1 & 10/1) (4/1) (4/1 & 10/1) (4/1) (4/1 & 10/1) DEBT SERVICE MILL RATE SERVICE AVG= AVG= AVG= (A) 4.25% 4.50% 4.75% $0.54 $857,823 $2.26 2008 2009 $857,823 Increase $1,113,410 $2.80 2009 2010 $863,254 $35,000 $215,156 $1,168,626 $2.79 2010 2011 $430,582 $535,000 $203,044 $1,227,213 $2.80 2011 2012 $429,125 $480,000 $181,475 $15,000 $121,613 $1,259,031 $2.73 2012 2013 $227,837 $505,000 $160,544 $250,000 $115,650 $1,319,476 $2.73 Final Impact Year 2013 2014 $227,838 $525,000 $138,656 $260,000 $104,175 $15,000 $48,806 $1,387,331 $2.73 of 5-Year CIP 2014 2015 $227,837 $550,000 $115,813 $270,000 $92,250 $85,000 $46,431 $1,245,274 $2.33 2015 2016 $71,568 $575,000 $91,906 $285,000 $79,763 $100,000 $42,038 $1,165,931 $2.08 2016 2017 $595,000 $67,044 $300,000 $66,600 $100,000 $37,288 $1,171,294 $1.99 2017 2018 $625,000 $41,119 $310,000 $52,875 $110,000 $32,300 $1,174,463 $1.90 2018 2019 $655,000 $13,919 $325,000 $38,588 $115,000 $26,956 $505,000 $0.78 2019 2020 $340,000 $23,625 $120,000 $21,375 $503,544 $0.74 2020 2021 $355,000 $7,988 $125,000 $15,556 $139,500 $0.20 2021 2022 $130,000 $9,500 $138,206 $0.18 2022 2023 $135,000 $3,206 $3,335,864 $5,080,000 $1,228,675 $2,710,000 $703,125 $1,035,000 $283,456 $14,376,120 (A) Mill rate based on 2010 Equalized Valuation (TID-OUT) of $379,267,900 with annual growth 5%. Developing a Plan of Finance for Municipal Projects Example Capital Finance Plan

  10. Developing a Plan of Finance for Tax Incremental District Projects Example TID Proforma Analysis

  11. Developing a Plan of Finance for Enterprise Financing Example Coverage Analysis

  12. Developing a Plan of Finance for Enterprise Financing Example Coverage Analysis

  13. ClosingInvestment of Bond Proceeds • Temporary investment period • 2-year exception • 3-year exception

  14. Continuing Disclosure • Principal and interest payment delinquencies; • Non-payment related defaults; • Unscheduled draws on debt service reserves reflecting financial difficulties; • Unscheduled draws on credit enhancements reflecting financial difficulties; • Substitution of credit or liquidity providers, or their failure to perform; • Adverse tax opinions or events affecting the tax-exempt status of the security; • Modifications to rights of securities holders; • Bond calls; • Defeasances; • Release, substitution, or sale of property securing repayment of the securities; • Rating changes; and • Failure to provide annual financial information as required. 

  15. Ongoing MonitoringRefunding Bonds • Call Provisions • Current Refunding • Advance Refunding

  16. Conclusion • Dynamic Modeling • Continual Process

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