Skip to main content
Contact Us   |   March 06, 2015


Tax-Exempt Bond Financing


CHEFA offers a choice of tax-exempt financing programs for eligible nonprofit organizations. Bond offerings can be publicly sold or issued as a private placement, unenhanced or with credit enhancement, bear interest at fixed or variable interest rates, and have a maturity of not greater than fifty years.

CHEFA's underwriting policy does not allow for the issuance of unenhanced non‑rated public offerings.


Fixed Rate Stand Alone Issue

The Authority's general guidelines for unenhanced offerings are as follows.  Each proposed bond issue will be evaluated on a case-by-case basis.

  • Public Offering:  Minimum rating of "Baa2/BBB/BBB" from at least two of the three nationally recognized rating agencies (Moody's, Standard & Poor's, or Fitch); Sold in $5,000 denominations.
  • Limited Public Offering:  Issues rated "Baa3/BBB-/BBB-" by any one of the three nationally recognized rating agencies, with no negative indications with minimum $100,000 denominations.

Fixed Rate Insured

Credit enhancement (guaranty) from a municipal bond insurance company typically provides the lowest cost of capital, but may not be an option to all borrowers.

Variable Rate Demand Bonds

A variable rate structure requires credit enhancement from a Letter of Credit Bank with the highest short-term rating (A-1, P-1).


Private Placement offerings are typically issued by borrowers that are unable to obtain an investment grade credit rating. These transactions may be issued as fixed or variable rate and sold only to accredited investors or qualified institutional buyers with an initial investor letter acceptable to the Authority.

Private placement offerings can also be sold directly to a bank as the sole purchaser, known as a bank direct purchase. The bank is responsible for conducting all necessary due diligence and the Authority is strictly acting as a conduit issuer. All financial covenants and security provisions are based on the bank's requirements.