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Recent Developments in Bank Placement Financing for Capital Projects. Mike Smith BB&T Governmental Finance. Bank Placements: Traditional Determining Factors. Term Issue Size/Type Flexibility (Call provisions, etc.) Issuance Costs Disclosure Issues Bank Qualification.

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recent developments in bank placement financing for capital projects

Recent Developments in Bank Placement Financing for Capital Projects

Mike Smith

BB&T Governmental Finance

bank placements traditional determining factors
Bank Placements: Traditional Determining Factors

Term

Issue Size/Type

Flexibility (Call provisions, etc.)

Issuance Costs

Disclosure Issues

Bank Qualification

recent developments
Recent Developments

Banking Market

Structural Issues: Terms/Rates

Credit Issues

Flexibility/Cost Issues

Tips for Financing in Current Environment

bank placement market
Bank Placement Market
  • Impact of Bond Insurance Market
  • Fewer Funding Sources
  • Wave of Refinancings: Cost savings, Reserve Fund Issues
  • Essentiality of Requests (core municipal functions)
structural issues
Structural Issues

Terms up to Twenty Years

Transaction types haven’t changed, but pricing differentiation based on type is more prominent

Current Rate Scenarios (bank qualified):

Three years: 1.40% - 1.90%

Five years: 1.50% - 2.00%

Seven years: 1.80% - 2.30%

Ten years: 2.20% - 2.70%

Fifteen years: 2.80% - 3.30%

Twenty years: 3.70% - 4.20%

credit issues
Credit Issues

Financial Statements must be Current

Cash Flow

Leverage Ratio

Undesignated Fund Balances

Cash positions

flexibility cost issues
Flexibility/Cost Issues

Maximum of 45 day rate commitments

Call protection for Longer Term Transactions

Fees-bank underwriting fees common

Insurance/ratings not required

Reserve funds-case by case basis

tips for financing in the current environment
Tips for Financing in the Current Environment

Pro-Formas: Build your own case for financing

Financial Statements

Larger, longer term requests may require more extensive banking relationships

Pay attention to the basics: cash flow, reserves, leverage ratios.

for further information

For further Information:

Mike Smith, AVP

BB&T Governmental Finance

407.241.3570

[email protected]

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