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Flexible Financing: Taking a Look at Low Short-Term Interest Rates Options

First few Article Sentences

As an old Chinese proverb says, “Crisis can be used as an opportunity by some.” As the U.S. economy continues to struggle, both long-term fixed and short-term variable interest rates have been very low and may remain low through mid-2013, according to the Federal Open Market Committee. Hospitals looking for flexibility in their funding options may want to consider financing a new project or refinance existing debt with a variable-rate financing structure.

Show Me the Interest Savings

The LIBOR one-month rate and SIFMA indices are the taxable and tax-exempt benchmarks for financing debt with short-term rates. The one-month LIBOR rate, currently at .23% at the time of writing this article, is used to price floating-rate notes and variable-rate mortgages. The SIFMA municipal swap index, now at .15%, is used in remarketing tax-exempt variable-rate demand bonds. Both rates have fallen significantly since 2008.

Taddey, Anthony, J.

Dopoulos, Jason, J.

Lancaster Pollard

Facility Financing

October 11, 2011

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