Private Placements are fixed income securities that are not registered with the Securities and Exchange Commission (SEC).  As such, private placement bonds are not publicly issued or publicly traded, and as a result are not required to be rated by a credit rating agency.

Private Placement Bonds issued without pledged collateral are called Senior Unsecured Private Placements, and those issued with pledged collateral are Senior Secured Private Placements.  The issuer of the bonds is directly and fully responsible for repayment of the notes based on its full faith and credit, so the notes are referred to as Direct Obligation Private Placement Bonds.

Focus is given to bond issuers with investment grade credit ratings from a Nationally Recognized Statistical Rating Organization (NRSRO).  Alternatively, issuers without credit ratings from an NRSRO may still be acceptable if they have an NAIC rating of 1 (AAA through A-) or 2 (BBB+ through BBB-). 

Loan Structure:

• 100% recourse to the issuer and its full faith and credit
• Direct, unconditional, unsubordinated, senior notes (secured or unsecured)
• Up to 100% financing of a property or project costs including soft costs
• Minimal expense deduction (annual trustee fee)

Loan Terms:

• $15 million to $1 billion
• Typically semi-annual payments
• Up to 15 year bond term
• Interest only or fully amortizing
• 30/360 interest calculation
• Yield Maintenance at U.S. Treasuries plus 50 bps
• Fixed rate locks within 1 to 3 days after bonds are "circled" or placed
• Include loan covenants such as minimum net worth, debt service coverage, etc.

Typical Uses of Proceeds:

• Working capital
• Mergers and acquisitions
• Debt consolidation or refunding
• Acquisition or construction of property and/or improvements