Water For Texas Conference Bonds 101: Demystifying the ...

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Anne Burger Entrekin Managing Director 70 Northeast Loop 410, Suite 710 San Antonio, Texas 78216 (210) 308-2204 Telephone anne.burgerentrekin@

January 24, 2017

Water For Texas Conference

Bonds 101: Demystifying the Bond Issuance Process

What are Municipal Bonds?

? A debt security or debt obligation issued by or on behalf of a local authority or a political subdivision

? The debt security for the local authority or political subdivision is like an IOU

? The debt security for the investor is like a loan that gets repaid, usually with interest

? Political Subdivisions utilize municipal bonds to create a better asset/liability match

Member FINRA / SIPC

1

? 2017 Hilltop Securities Inc.

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How are the Mortgage Process and Debt Issuance Process Similar?

Member FINRA / SIPC ? 2017 Hilltop Securities Inc. All Rights Reserved

Customary Phases for Mortgages and Municipal Bonds

PHASE 1

PHASE 2 PHASE 3 PHASE 4 PHASE 5 Customary Phases in Mortgage Process

PHASE 6

PHASE 7

Develop Mortgage Strategy

Choose Mortgage Product

Choose Lender

Prepare Documents

Loan Processing

and Approval

Underwriting

Closing

Customary Phases in Municipal Bond Issuance Process

Develop Financing Program

Set Financing

Terms

Coordinate Related Service Providers

Prepare Documents

Coordinate Rating and

Credit Process

Conduct Marketing and Sale of

Debt

Closing and Post- Closing

Member FINRA / SIPC

3

? 2017 Hilltop Securities Inc.

All Rights Reserved

Phase 1 for Mortgages and Municipal Bonds

Mortgage Process

Develop Mortgage Strategy

PHASE 1 Municipal Bond Issuance Process

Develop Financing Program

?Understand Credit Score

?Review existing debt

?Approximate Range for Home Costs

?Formulate a strategy and approach to getting a mortgage

?Create/review long term financial and capacity plan

?Conduct survey of financial resources ?Review existing debt ?Approximate Range of Project Costs ?Develop plan of finance ?Create/review long term financial and capacity plan

Member FINRA / SIPC

4

? 2017 Hilltop Securities Inc.

All Rights Reserved

Mortgage and Municipal Bond Issuance Volume

$500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000

$0

2007

2008

Municipal Bond Issuance Trends

2009

2010

2011

Volume

2012

2013

Number of Issues

2014

2015

2016

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Member FINRA / SIPC

5

? 2017 Hilltop Securities Inc.

All Rights Reserved

What Are Funds Used For?

Mortgages

Financing Purpose

Mortgage

Municipal Bonds

New Money

Financing Purpose

Refinancing

Refunding

Member FINRA / SIPC

6

? 2017 Hilltop Securities Inc.

All Rights Reserved

Phase 2 for Mortgages and Municipal Bonds

Mortgage Process

Choose Mortgage Product

PHASE 2 Municipal Bond Issuance Process

Set Financing Terms

?Determine mortgage structure:

?Fixed / Variable

?Term ? 15 year / 30 Year

?Amortization ? Level Payments / Balloon Payments

?Frequency ? Monthly or Bi- Weekly Payments

?Structure the financing ?Design issue features ?Analyze range of debt alternatives ?Evaluate market innovations ?Determine bond issue structure

Member FINRA / SIPC

7

? 2017 Hilltop Securities Inc.

All Rights Reserved

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