Executive Summary on Borrowing
Twice a year, following the Annual General Meeting in March and the Semi-Annual Meeting in September, the MFA will fund client loan requests which have undergone all appropriate approval processes. Deadlines for regional districts to submit Security Issuing bylaws to the Ministry of Municipal Affairs for a Certificate of Approval are typically six weeks before these meetings.
Once requests are approved, clients can generally expect funding in April for the Spring Issue or October for the Fall Issue. The exact timing of funding may vary as we monitor the capital markets and manage refinancing requirements. If you require funds between long-term issues, please see our Short-Term Borrowing page.
Loan proceeds are equivalent to 99% of the gross request, and 1% is withheld by the MFA, as security against loan default. The 1% is held in trust by the MFA in its Debt Reserve Fund and will be refunded, with interest, at loan expiry.
New issues are often funded by issuing a 10-year bond, locking in a fixed interest rate for ten years. As clients may borrow for up to thirty years, loans longer than ten years are typically refinanced every five years, following the initial ten years.
Please note that while new issues are generally for a 10-year term, the MFA will evaluate how best to finance each Issue based on market conditions, the requests received, and with our overall portfolio in mind, as we consider future refinancing risk.
Interest payments are required semi-annually and begin six months after proceeds are received. The MFA passes these payments on to the bondholders. Interest costs are based on the original amount borrowed throughout the life of the loan.
Principal repayments occur annually, beginning one year after funds are received. The MFA deposits principal payments in a sinking fund where they earn interest until it is time to repay the bondholders.
The earnings that the MFA anticipates it will realize on principal repayments is called the actuarial. Associated with each principal payment (beginning in year two) is an actuarial adjustment which is a non-cash reduction of your loan balance based on expected sinking fund earnings.
The outstanding obligation to the MFA is the gross loan request, less the sum of the accumulated principal payments and the actuarial adjustments to date – or in other words, the reducing balance on the amortization schedule as of the most current date.
Early Loan Repayments:
Members wishing to repay their loan early may only do so in full at any of the stated refinancing dates for an Issue (indicated in the Status of Loans). If you have requested a unique financing method, you may not be able to pay out early. Should you have any questions, please email email@example.com. Please note that partial pay downs are not permitted.
Members wishing to payout must notify the MFA before the applicable deadline date (posted in the Status of Loans and the Message section of the Client Portal). Notice should be a signed request on letterhead, advising the MFA that you intend to payout your loan(s), and must include the following:
- Amount of early payout - the balance owing is the amount outstanding according to the amortization schedule at the refinancing date (after payment of the regularly scheduled principal and interest amounts)
- Method of payment – EFT pull by MFA
- Date of payment – must be refinancing date
- LA Bylaw # -
- Issue # -
Clients must also complete the One Off Electronic Fund Transfer Form to the MFA before the applicable refinancing date. The form can be found in the Client Portal. If you need assistance with this process, please email firstname.lastname@example.org.
If the MFA earns more than the estimated actuarial associated with a loan, the borrower will be paid any excess shortly after paying out the loan in full.
Spring 2024 Issue:
- Regional Districts – February 14, 2024: Applications for a Certificate of Approval on a Security Issuing bylaw due to Ministry.
- Regional Hospital Districts – February 23, 2024: Certified Capital Borrowing bylaws, RHD Liability Certificates and Requests for Long Term Financing due to MFA.
- Refer to the Spring 2024 Long-term Borrowing Opportunity memo for full details.