Calculation of Bond Yield. This task involves preparation of a debt service table and an independent calculation of the yield on each issue. The resulting yields will be verified with those stated on the non- arbitrage certificates.
Calculation of Bond Yield. The Bonds are a “variable yield issue”, as defined in Section 1.148-1(b) of the Regulations. Accordingly, Bond Yield will be computed separately for each computation period. As provided in Section 1.148-4(c) of the Regulations, the Bond Yield for each computation period will be the discount rate that, when used in computing the present value, as of the first day of the computation period, of all the payments of principal and interest and fees for qualified guarantees that are attributable to the computation period, produces an amount equal to the present value, using the same discount rate, of the aggregate issue price of the Bonds as of the first day of the computation period. Such payments will include principal and interest to be paid on the Bonds and fees paid to the Bank for the Letter of Credit, as a qualified guarantee. As required in Section 1.148-4(f) of the Regulations and based in part on the Underwriter’s Certificate, it is determined that, computed over the term of the Letter of Credit, the present value of the savings resulting from the Letter of Credit (i.e., the present value of the difference between the interest payable on the Bonds and the interest which would be payable on the Bonds if the Letter of Credit had not been obtained, utilizing a discount rate equal to the yield on the Bonds and taking into account the fees for the Letter of Credit) is greater than the present value of the aggregate fees paid to the Bank. Further, as evidenced by the Closing Certificate of the Bank, (i) the Letter of Credit unconditionally shifts the ultimate credit risk for the Bonds to the Bank (ii) the fees and charges to be paid to the Bank for the Letter of Credit do not exceed a reasonable charge for the transfer of credit risk and are comparable to fees and charges charged by other guarantors in comparable transactions; and (iii) the fees and charges to be paid to the Bank for the Letter of Credit do not include any direct or indirect payment for a cost, risk or other element that is not customarily borne by guarantors of tax-exempt obligations. In the event that the Bonds are converted to a Fixed Rate, on the Conversion Date, the Bonds will be treated (for purposes of computing the Bond Yield) as having been retired on that date and reissued as a “fixed yield issue.” Following the Conversion Date the Bond Yield on the Bonds will be calculated, as provided in Section 1.148-4(b) of the Treasury Regulations, as that discount rate which when used in compu...
