There are many milestones in the timing of a bond issue financing. Please refer to the section on Steps to a Financing for more information for each phase of financing. Some basic steps include:
Selection of the financing team and structuring the plan of finance. Preparation of the legal transaction and disclosure documents. Preparation of presentation materials for rating agencies and/or credit information packages for bond insurers and letter of credit banks. Conduct a TEFRA hearing. Obtain approval of the CHEFA Board for CHEFA to issue the bonds and loan the proceeds to the borrower. Market the transaction, which includes pricing and selling of the bonds. Hold a closing for the transaction and transfer bond proceeds.
The length of time needed to complete a bond financing depends on the project details and financing needs of the borrower, the complexity of the transaction structure, and the level of interest from potential investors in the bond issue. The exact amount of time may vary, but is characteristically four to six months for the transaction to close. A sample financing timeline is shown below.
Whether the bonds are structured as a variable or fixed rate issue, the repayment or amortization period as well as security provisions for the bonds will depend on the goals and needs of the borrower relative to the project and overall strategic goals. Many financing structures and options may be considered, analyzed and evaluated. CHEFA staff, its financial advisor, when applicable, and the investment banker all work together with the borrower to determine which overall view of the financing is the most attractive and suitable for the project.
The selection of an investment banker is a vital part of your bond issue, as they provide the direct access to the capital markets for your bond sale. Qualities the borrower should consider in the selection of an investment banking firm include:
Experience and depth of staff, and the level of available resources in the firm. Complexity of the financing transaction. The level of understanding regarding the borrower's needs. Pricing for underwriting services.
A competitive bid process for the selection of an investment banker can be a useful tool to obtain information about structuring a bond issue, and to obtain the lowest possible cost for these services. CHEFA can facilitate a Request for Proposals ("RFP") and provide comparative data from other bond issues to enable the borrower to evaluate potential investment bankers and to make an informed decision.
CHEFA will bring its bond counsel and special counsel to the financing, and also a financial advisor, should the structure require those services.
