15450 So. Outer Forty Rd.
Suite 230
Chesterfield, MO 63017
(636) 519-0700
(636) 519-0792 Fax
info@mohefa.org
MHEFA
Association
Memberships
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PHASE II: STRUCTURING OF THE FINANCING
A. Drafting of Financing Documents
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As a result of the discussions at the organizational meeting, preliminary documents are drafted and distributed to all participants. These documents typically include Trust Indenture, Loan Agreement, Preliminary Official Statement, and Purchase Contract. These documents are drafted by the attorneys in conjunction with the institution and the senior manager to ensure the documents adequately describe the agreed upon terms of the financing. The documents are subject to review at three to four drafting sessions before being finalized by all parties for the sale of the bonds. |
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- B. Credit Enhancement/Rating Process
A key decision in the structuring process concerns the feasibility of credit enhancement of the bond issue. Credit enhancement comes in two forms - bond insurance and letters of credit. Typically bond insurance is used when the bonds are expected to carry fixed interest rates, and letters of credit are used when the bonds will carry changing or variable interest rates (e.g., bonds may be issued with a seven-day variable interest rate where the interest rate is changed weekly to the market rate). The decision to pursue credit enhancement and/or a rating from the rating agencies is usually made with input from the institution, the senior underwriter, and the Authority’s financial advisor. An analysis of cost versus interest rate advantage helps to determine the best path for each financing. Several options can be pursued simultaneously, until the best available option becomes apparent. Under either scenario, it is typical for the documents to be submitted to the credit enhancer/rating agencies and a meeting at the project site to be held prior to a commitment being issued.
The Authority will not automatically finance a public issue with less than any "A" category rating from Standard & Poor’s or Moody’s. See Policies and Practices for more information.
- C. Interim Financial Statements
Unaudited interim financial statements may be required from the institution, depending upon the timeliness of the most recent audit. These financial statements, as well as the most recent audit, may be included in the Official Statement. (top)
Missouri Health and Educational Facilities Authority
15450 South Outer Forty Rd., Suite 230, Chesterfield, MO 63017
(636) 519-0700 (636) 519-0792 Fax
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