A non-profit refinanced high cost debt via a $25,000,000 Baa3-rated taxable bond transaction.

Type of Financing
Taxable General Obligation Bond Issue

Financing Amount
$25,000,000

The Need:

A well-known non-profit issued higher interest rate debt in 2015 to finance a variety of its capital expansion projects. When interest rates fell dramatically during the COVID-19 crisis in the Spring of 2020, the non-profit sought to refinance this debt as quickly and efficiently as possible. An extensive review of the current and future prospects of the non-profit allowed the rating agency to provide a “Baa3” investment grade rating for the new bonds.

Our Solution:

Coughlin worked with the non-profit borrower to analyze the most effective term and repayment structure and added an initial interest only period to decrease mandatory payments as the effects of the coronavirus pandemic on the borrower’s cash flows and portfolio values remain unclear. Ultimately, a fixed rate, 20-year repayment schedule was selected with favorable prepayment options. The taxable bonds were placed with a nationwide set of institutions and individuals that sought a good investment with an attractive return and also wanted their investment dollars to support the important work of the non-profit. The borrower also purchased some of the bonds for its own accounts. These bonds can be resold as and if needed and can be used in conjunction with a planned giving program.