Tax-Exempt Industrial Revenue Bonds
Tax-Exempt Industrial Revenue Bonds are suitable for tax-exempt borrowers. These include manufacturers, non-profit organizations and multi-family rental housing. Other uses that qualify include solid waste disposal, power co-generation and airport-related facilities. Tax-exempt Industrial Revenue Bonds are suitable for real estate transactions, construction projects and plant and equipment purchases.
HSBC has been an active participant in the Industrial Revenue Bond market, providing credit enhancement, placement, remarketing and trustee services for a large number of IRB transactions throughout the United States.
During the past 15 years, the bank's highly rated letter of credit (currently "AA-" from both major rating agencies) has been effectively combined with the bond distribution capabilities of HSBC Securities to originate IRBs, with a original part amount in excess of $1 billion.
Benefits:
- Relatively low-cost funding (typically 200 - 300 bp below conventional financing)
- Real property tax abatement
- Sales tax exemption
- Mortgage recording tax exemption
Features:
- Fixed and floating rates available.
- Bond proceeds limited to financing capital assets.
- Manufacturers limited to $10 million capital expenditure over six years within the political jurisdiction where the project is located.
- Three years to spend bond proceeds.
- State volume cap allocation.
Bond Types:
- Tax-exempt Variable Rate Demand
- Tax-exempt Fixed Rate
- Taxable Variable Rate Demand
- Industrial Development Revenue
- 501 (c)(3) Civic Facility
- Multi-Family Housing Revenue
- Exempt Facility
- Bank Qualified
Typical Considerations:
- Market conditions
- Location
- Tax status
- Credit quality
