Introduction to Structured Finance
Spring 2025
Assignment #2
Part 1: Size and structure the project finance transaction described below
Purpose: Finance the construction of a hospital using a series of revenue bonds.
Issuer and Series Designation: County of NYU
Hospital Facilities Revenue Bonds Series 2025A
Bonds Dated Date: 4/22/2025
Bonds Delivery Date: 4/22/2025
First Interest Payment Date: 11/01/2025
Gross Project Cost: $500,000,000
Drawdown Schedule: $25,000,000 monthly drawdowns starting 5/1/2025 through and including 04/01/2026, $20,000,000 monthly drawdowns starting 05/01/2026 through and including 12/01/2026, and $10,000,000 monthly drawdowns starting 01/01/2027 through and including 04/01/2027.
Project Fund sizing protocol: Net Funded assuming 2.00% investment rate. Interest paid monthly.
Debt Service reserve fund: Maximum Annual Debt Service. Invested at 3.50% with interest earnings during construction deposited to capitalized interest account. Interest earnings paid semiannually beginning 11/01/25.
Capitalized interest requirement: Fully capitalized through one month beyond end of construction period (5/1/27). Net funded assuming 2.00% reinvestment rate. Interest earnings paid semiannually beginning 11/01/25.
First principal payment date: 5/1/2028
Final principal payment date: 5/1/2055
Interest rate and yields: See Below
Underwriter’s Discount: .70% of par
Cost of Issuance: Fixed Costs @ $550,000 Variable Costs @ .065% of par
Other Sources of Funds: Issuer contribution (Equity) of $5,000,000
Other Uses of Funds: Bond Anticipation Note takeout of $18,500,000 Bond Structure: Level Annual Debt Service
Part 2: How much equity would be required if annual hospital revenues available for debt service were projected to be $37MM and required annual bond coverage = 1.10x.