Analysis of Revenue Bonds

What this video covers

• Why a feasibility study from an independent consulting engineer is required before issuance, and what makes essential service revenue (water, sewer, electric) more reliable than non-essential project revenue like toll bridges
• The six key indenture covenants: rate covenant, insurance covenant, maintenance covenant, additional bonds test, catastrophe covenant, and non-competition clause
• When the additional bonds test must be satisfied (before, not after, new parity bonds are issued) and why subordinate lien bonds are the only alternative if the test fails
• The critical order-of-payment distinction between a gross revenue pledge (bondholders paid first) and a net revenue pledge (operations and maintenance paid first), including the memory aid to lock this in
• How to calculate and interpret the debt service coverage ratio (DSCR), including why utility revenue bonds need only 1.25x coverage while non-essential projects need 2.0x
• Why bond insurance shifts credit risk to the insurer, not the issuer, and how to identify the rated party on an insured revenue bond
• Where to locate official statements (Electronic Municipal Market Access System, or EMMA), credit ratings, and market data for ongoing municipal disclosure