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 Housing and 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.
For details of specific Issues, please see your Loan Rates and Dates report in the Client Portal, and to estimate borrowing costs for new loans, please see the Long Term Debt Amortization Schedules.
Early Loan Repayments:
For information on Early Repayment of Long-term Loans, visit this page.
Surplus Payments:
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 2025 Issue:
To be included in the Spring 2025 issue the following deadlines are applicable:
- Regional Districts – March 14, 2025: Applications for a Certificate of Approval on a Security Issuing bylaw due to Ministry.
- Regional Hospital Districts – March 14, 2025: Certified Capital Borrowing bylaws, RHD Liability Certificates and Requests for Long Term Financing due to MFA.
- Refer to the Spring 2025 Long-term Borrowing Opportunity memo for full details.