| Question | Answer |
| What is the best way to use Bondsize? | Bondsize is a dynamic web based application which allows the user to make initial estimates of basic data inputs and to continually refine with updates of assumptions. As specific project costs, costs of issuance, market rates, payment dates and other features evolve, input refinements can be easily made. We have provided Suggestions to allow the user to most efficiently develop and modify solutions based on new input. SUGGESTION: Use Bondsize 24/7 and let us know how we can best serve your needs. |
| What is a Bond? | A written promise to pay a specified sum of money( the face value or par) on a specified date or dates ( the maturity date) with periodic interest at a specified rate. Bondsize provides for the user to input a single rate for all maturity dates or individual rates for each year. SUGGESTION: For initial calculations,just use one rate. |
| What is Capitalized Interest? | Capitalizing interest is the practice of including funds for initial interest payments in the par amount of bonds being issued. The purpose is to provide funds pending development of revenues for such purpose. Bondsize calculates the amount by selecting a time period and interest rate at the input stage. Including capitalized interest is an option NOT a requirement. |
| What are Costs of Issuance? | These are the customary soft costs to be included in sizing a bond issue. Typical costs include but are not limited to fees for, attorneys, feasibility studies, advisors, bond underwriters, bond registrar/paying agent fees, legal publications and printing. Bondsize provides the user the choice of inputting a total dollar amount for these fees ( if known) or simply an estimated percentage of the issue size. SUGGESTION : For an initial quick look at a solution simply use a conservative percentage of par (i.e. in the 2-3 % range). |
| What is Par Value? | The total principal or face amount of that the borrower agrees to pay at maturity. |
| What are bond denominations? | Typical bond repayment amounts ( or maturities )are structured in multiples of $ 5,000. Bondsize also provides for solutions in multiples of $ 1 . These often are used in special need solutions such as grant loan or other government loan applications. |
| What is Net or Average interest Rate? | The effective interest rate paid by the borrower after taking into account consideration any premium or discounts received on sale of the bonds. This is a Bondsize calculated rate and not a user input. |
| What is nominal interest rate? | The interest rate specified for each maturity of bonds and is the rate input by the Bondsize user. Bondsize provides for input either as a single rate for all years or multiple rates associated with the prevailing yield curve. SUGGESTION: For initial calculations, just use one rate. |
| What is average life? | Average Life is a calculated period which takes into account payment dates, principal payment amounts, and the date from which interest commences. It is a measure used by investors and others to ascertain the average duration or loan life. For example, a bond issue with an overall repayment period of 20 years may have an average life of 12.5 years. SUGGESTION: Unless you are the original purchaser of the issue do not be concerned with this calculation. |