Merely as an example, say your firm has an $18 million project: an appropriate proportion of capital to finance through a revenue bond would be in the range of $10-12 million.  The key to a successful bond issue is locating entities that will purchase the bonds.  On a smaller bond, there can be a local placement; wherein a local financial institution purchases the bonds. But, on a bond issue as high as $10 million or more, the placement is typically in the market, thereby requiring the services of an underwriter.  Our starting point is locating the right underwriter to market the bonds.

There are several options for finding the underwriter.  First of all, as borrower, you may have an investment banking firm you have already worked with.  If you do not have an underwriter to recommend, bond counsel suggest you select a firm that understands your industry and your business, and has some experience in financing the kind of project that you are undertaking.  As the borrower, you are in the driver's seat for picking the underwriter.  A bond placement and sale for a project might typically be outturned in a period of 2-4 months after the underwriter is chosen.

The first task for the underwriter is an assessment of the credit worthiness of the borrower which, in turn, drives the interest rate for the bond issue.  Hence, there is no way to predict an interest rate until this assessment is done.  Further, most bond market placements require the issuance of a letter of credit from an AA rated bank, or other financial institution, as a prerequisite for moving forward.

The fee accrued by the Port District is arrived at via several factors, chief among them the amount of the bond issue itself, as well as interest rate and ease of marketing the bonds.

Contact Executive Director, Steve Jaeger to discuss how conduit bond financing might get your project underway.