Neighborly Bonds Challenge FAQ

Neighborly Bonds Challenge FAQ
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Want to apply? See neighborly.com/challenge for more information.

New to Neighborly? Watch this first.

 

What is Neighborly?

Neighborly is a San Francisco based firm, and provides underwriting services through its registered broker dealer subsidiary, Neighborly Securities. Neighborly leverages its financial technology focus to deliver an enhanced connection between states and localities to investors in their communities. Neighborly is not a municipal advisor.

Do I have to have a project ready to finance?

No. You may apply without a project. However, please indicate the type of projects that you are considering. For instance, if you want to submit an infrastructure project, but are not sure which specific project you would like to fund, indicate “TBD – Infrastructure” in the Project Description.

When and how will the winner be announced?

The winners will be announced on stage at the California Bond Buyer Conference on September 21st, 2016 in Los Angeles.

Is the application binding?

Entering the Neighborly Bonds Challenge does not constitute an obligation to utilize Neighborly for the sale of the bonds, but rather formalizes Neighborly’s ability to discuss financing options with the applicant through its emerging technology.

What will my interest rate be?

Neighborly is committed to executing transactions at prevailing market rates based on time of sale, size, structure, and credit of issue. In addition, Neighborly uses leading market indicators such as MMD, BVAL and MSRB trade data to evaluate bond pricing. Additionally, Neighborly has created transparent models based on rating, sector and other deal structure options such as maturity and call options. We use this data alongside our extensive market experience to enable issuers to come to market at competitive rates.

Do I have to use bond counsel Neighborly provides?

No. Challenge winners will have access, without charge, to bond counsel documents and tax opinion prepared by Orrick, Herrington & Sutcliffe. Winners may elect to hire the bond counsel of their choice.

Can I submit an entry that is part of a larger issuance?

Absolutely. If your municipality is planning an issuance greater than $10m, it can specify a portion of that issuance to be part of the Neighborly Bonds Challenge.

Can I issue more than $10M with Neighborly?

This may be possible depending on the conditions of the issuance.  Please email challenge@neighborly.com to discuss the details.

Do my bonds have to be rated?

No. You do not need to have a rating at the time of application. However, for purposes of the Challenge, we will most likely be selecting projects and issuers considered investment grade.

Can Neighborly provide credit enhancement?

We are currently in discussion with two bond insurance companies who may offer their services as part of the Challenge. Neighborly will not pay for credit enhancement. If selected, the issuer may elect to engage one of these companies or select one of their own.

What if my bond issuance isn’t completely sold to retail during pricing?

Like most municipal bond sales, Neighborly will will prioritize sales to retail investors in your community through an extensive local and regional marketing campaign.  However, if there are unsold balances, Neighborly will either utilize its balance sheet to underwrite or the Neighborly Capital Network to sell the remaining balances.  Our capital network includes more than 10,000 retail investors nationwide along with institutional asset managers, family offices and other large institutional buyers.

Does my project need to be a green bond deal or a socially responsible project?

We believe that much of the core municipal market meets the criteria of socially responsible investing. We value the contribution a project makes to the community over its specific labelling or sector focus. Many general obligation pledges and essential revenue credits are used to finance new projects that make a significant contribution to social and economic development.

Do I need a municipal advisor?

Neighborly welcomes your Municipal Advisor (MA) to the process, although as with any issuance, it is not required. We cannot recommend the use of a MA but acknowledge that they are an often used resource for municipalities. If selected, or our role is not that of a municipal advisor, but rather that of a broker/dealer. In providing this information to a municipal entity or obligated person, Neighborly is not recommending an action, acting as an advisor, and does not owe a fiduciary duty to an issuer under Section 15B of the Exchange Act with respect to this information. Neighborly is acting for its own interests as a broker/dealer, and any recipient may wish to discuss this information with their advisors before acting on this information. Securities are offered through Neighborly Securities a member of SIPC and FINRA. Neighborly may own, buy, or sell these securities. Additional information at neighborly.com/terms. In the case that an issuer has an outstanding Independent Registered Municipal Advisor (IRMA) letter, that can be delivered to Neighborly and Neighborly can conduct underwriting work with this exemption in mind.

Can Investors re-sell Neighborly bonds?

Neighborly Bonds are book-entry bonds with registered CUSIPs, and therefore are tradeable in the secondary market in the same way as any other registered municipal security.

What fees are included?
Neighborly will cover the following fees:

  • Traditional underwriter bond issuance costs (takedown and management fee)
  • Bond documents, including bond counsel opinion provided by Orrick, Herrington & Sutcliffe
  • Ipreo, Dalnet, and associated wire charges
  • DTC charges
  • Good faith carry (if necessary)
  • CUSIP fees
  • Day loan (if necessary)
  • Investor marketing
  • Paying Agent

What fees are discounted?

  • HIP (Human Impact + Profit) Investor Rating


What fees are not included?
The following optional fees are at your discretion:

  • Additional bond counsel (if applicable)
  • Credit enhancement (if applicable)
  • Rating agency fees (if applicable)
  • Municipal advisor fees (if applicable)
  • Trustee and trustee counsel fees (if applicable)
  • Auditor fees and/or a bring down letter on financials (if applicable)
  • Escrow fees (if applicable)

Neighborly

Neighborly delivers modern access, efficiency and transparency to borrowing communities and investors in the municipal bond market.

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