Analysis of Revenue Bonds

What this video covers

• Why a feasibility study by an independent consulting engineer is required before a revenue bond issue, and what it actually evaluates
• How essentiality and exclusivity drive revenue quality, and why utility revenue is more reliable than novelty-project revenue
• The protective covenants in the bond indenture: rate, insurance, maintenance, catastrophe, and non-competition clauses
• Why the additional bonds test must be satisfied BEFORE new parity bonds are issued, and how subordinate (junior lien) bonds differ
• The flow of funds under a gross revenue pledge versus a net revenue pledge, and the memory trick that net means "not until operations and maintenance (O&M) is paid"
• The debt service coverage ratio (DSCR) formula, why 2.0x is standard for non-essential projects, and why 1.25x is adequate for utility revenue bonds
• How credit enhancements like bond insurance shift credit risk from the issuer to the insurer, and where to find continuing disclosure on Electronic Municipal Market Access (EMMA)