In OFA’s Traditional Bond publicly offered bond program, the bonds are sold in the public market to retail investors, generally without restriction as to the qualifications of the retail purchaser. Publicly offered bonds are highly complex financing transactions for 501(c)(3) organizations, and nonprofits generally use this structure only for large transaction amounts. Yet this type of bond also potentially offers the most benefits to nonprofits: the most favorable interest rates; longer financing horizons; and the opportunity to customize documents and financing terms.
OFA’s rules generally require that publicly offered bonds be investment grade, based on the bond rating of the borrower or an acceptable credit enhancing organization. As is typical with publicly offered bonds, an “official statement” must be prepared that fully discloses the terms and risks of the financing.
*NOTE: Borrowers and their financial and legal advisors should confer with OFA’s staff prior to making an application to issue through OFA’s Traditional Bond publicly offered bond program.