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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. 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

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  1. Recent Developments in Bank Placement Financing for Capital Projects Mike Smith BB&T Governmental Finance

  2. Bank Placements: Traditional Determining Factors Term Issue Size/Type Flexibility (Call provisions, etc.) Issuance Costs Disclosure Issues Bank Qualification

  3. Recent Developments Banking Market Structural Issues: Terms/Rates Credit Issues Flexibility/Cost Issues Tips for Financing in Current Environment

  4. 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)

  5. 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%

  6. Credit Issues Financial Statements must be Current Cash Flow Leverage Ratio Undesignated Fund Balances Cash positions

  7. 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

  8. 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.

  9. For further Information: Mike Smith, AVP BB&T Governmental Finance 407.241.3570 mcsmith@bbandt.com

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