Bond Sizing


Overview

Sizes a new-moneybond issue and computes costs of issuance and reserves. Structures debt service according to one of 18 user-defined options. Can size bank notes and other debt instruments commonly issued by finance companies.

Features & Capabilities

Structuring Options – (a) Level debt service where the size of the bond issue is computed to encompass construction costs and costs of issuance and reserves.  (b) Level debt service where the user inputs the desired size of the bond issue.  (c) Level debt service where the user inputs a desired debt service payment. (d) Increasing/decreasing debt service where the user defines a yearly percentage factor and Mun-Ease structures the bond issue accordingly.  (e) A debt service schedule modeled after a user-defined revenue stream.  This feature can also be used to wrap debt service around pre-existing combined debt service. (f) Level principal.

Yield-to-call & deep-discount term maturities – Mun-Ease correctly computes the arbitrage yield limit and reoffering yields when the user sizes a bond issue that contains yield-to-call maturities (both for single and multiple call scenarios) or deep-discount term bonds.

Flow-of-funds feature: Allows the user to choose how interest disbursements from restricted funds are to be handled: (a) applied against debt service payments, or (b) applied against draws in a construction fund.

Construction draws – Mun-Ease can size a bond issue to cover up to 30 separate draw schedules.  Each draw schedule can be gross or net-funded and can have its own construction yield.  Draw schedules can be modeled after a normal curve or chi-square distribution.

Cost of issuance – Underwriter expenses are expressed as a  percentage of principal.  Credit enhancements are expressed as a percentage of gross debt service or debt service net of accrued and capitalized interest.  Credit enhancements can be computed for specific maturities.   Allows the user to enter an unlimited number of miscellaneous cost items.

User-defined sources/uses – Mun-Ease provides up to six user-defined sources and uses of funds.

Coupon rate schedules and open market investments can be imported directly from the Wall Street Journal web site.

Debt service reserve (DSR) fund – The size of the DSR fund can be computed according to 1 of 5 rules including the lesser of 10% of stated principal, maximum annual debt service or 125% of average annual debt service.   A bond surety fee can be computed based on the size of a simulated debt service reserve.

Capitalized interest fund – Mun-Ease can size a bond issue to pay interest and/or principal on the bond issue for a user-defined time period and can “net fund” the amount.  The capitalized interest can be a non-coupon date.

Maturities within the bond issue can be current interest bonds, zero coupon CABS, or any combination.  Mun-Ease allows the user to price the bonds at par, or to enter reoffering prices or yields.

Inputs to a sizing calculation can be saved to a profile that allows the user to perform sizing calculations with minimal data entry.  Coupon rates are stored in a rate table for easy access and lookup.

Best-fit modeling ability  – This feature is useful when a debt service is modeled after a user-defined revenue stream.  Mun-Ease determines where to place zero-coupon CABS so that debt service exactly matches the revenue stream.

“Assumption Analyzer” routines – Mun-Ease analyzes your input assumptions and can automatically resize a bond issue if it determines that input variables are invalid.

Calculations

True interest cost, all-inclusive TIC, net interest cost, arbitrage yield limit, original issue and underwriter discounts, credit enhancements, reoffering prices/yields, debt service reserve fund, bond surety fees,  and capitalized interest.

Reports

(41) Construction Draws Report – This report displays construction draws (revenue flows) for a user-defined capital project.

(72) Sizing Construction Draws For Multi-Projects Report – This report displays, for each draw schedule included in a sizing analysis, the initial deposit to the construction fund and subsequent draws. If you have chosen the “net funding” option, interest earned in the construction fund is applied to the draws, otherwise the interest is applied to the coupon payments.

(74) Bell Curve Draw Schedule – Displays a construction draw schedule that has been modeled after a normal curve or chi-square distribution (skewed curve).

(14) Sizing Debt Service Report – This report displays debt service requirements over the life of the bond issue. It also displays balances of the debt service reserve and capitalized interest funds over the life of the issue.

(14b) The Yearly Debt Service Report – Displays yearly debt service for a newly sized bond issue. Unlike Report #14, the yearly debt service schedule can almost always be displayed on a single page.

(17c) Summary of Calculations – Provides a one-page summary of the calculations resulting from the sizing process.

(18) Sizing Sources and Uses of Funds Report – This report displays the sources and uses of bond proceeds based on the sizing parameters input by you.

(56) Comparative Yield Report – Provides information to verify the TIC, All-In TIC, and the Arbitrage Yield Limit Calculations. This report cannot be generated if the newly sized bond issue contains yield-to-call maturities or deep-discount term bonds.

(70a) Pricing Summary Report – Displays reoffering prices and yields for each maturity in the bond issue. If the bond issue contains yield-to-call maturities, the report displays the price and call date from which the yield was calculated.

(72a) Sizing Construction Draws For Multi-Projects Report – The report displays, for each draw schedule included in a sizing analysis, the initial deposit to the construction fund and subsequent draws. If you have chosen the “net funding” option, interest earned in the construction fund is applied to the draws, otherwise the interest is applied to the coupon payments.

(73) Interest Rate Probabilities Based on Statistical Projections – This report is used to assess probabilities of different interest rate scenarios. Probabilities can be calculated based on a normal curve or a chi-square distribution.

(83) Miscellaneous Issuance Costs Report – Displays individual cost items that are included in the Other TIC Costs summary field.

(17a,b) Summary of Inputs / Calculations – Provide a two-page summary of the input parameters and sizing calculations.

(19a,b,c) Sizing Fund Balance Reports – These reports display balances of the debt service reserve, capitalized interest, and contingency funds over the life of the bond issue. The information displayed in the report is based on the sizing parameters input by you.

(75) Bond Production Report – This report displays the attributes of the individual maturities within a bond issue and displays summary information to verify the NIC calculation.

(1j) Variable Rate Transactions Report – This report lists the variable rate payments for a bond issue and is generated through the file|variable rate bonds| edit/add/delete menu option.

(1k) Debt Service Schedule For a Note with Summary Fees – Report #1k displays the debt service schedule of a note or variable rate bond. Individual fees for each payment are totaled and displayed in a summary column.

(1L) Debt Service Schedule For a Note with Detailed Fees – Report #1k displays the debt service schedule of a note or variable rate bond in a landscape format. Individual fees are displayed in separate columns.