In this article, John Franklin of Pearl Creek Advisors provides an important overview of the bond and bank markets and how they are each affected by COVID-19. More importantly, John explains how the current market shifts may affect the short- and long-term financing plans and capital investment options for your organization. Read on to find out why John advises that any financing being currently considered should be a tactical move instead of a long-term strategy for senior living providers.
Coronavirus Initial Impact on Tax-Exempt Capital Markets
The past few weeks have been an extraordinary time for everyone and for every industry, especially the hospital and senior living sectors. The tax-exempt bond and bank private placement markets have been no exception. I have spent the past several days talking to banks, investment banks, and investors. The following is a summary of what I have gleaned from these various conversations.
The Bond Market
First, let’s discuss the bond market. During the past year, tax-exempt borrowers, especially non-rated senior living providers, have been fortunate due to a record run of over 52 weeks of weekly cash in-flows to bond funds averaging about $1.6 billion per week. This created record low interest rates in the tax-exempt bond market, with interest rates on 30-year non-rated senior living transactions approaching 4.0 percent. That ended three weeks ago due to the Coronavirus crisis when investors began to pull money out of tax-exempt mutual funds for the first time in a year. For the week of March 16th, the market had a record $12.2 billion of outflows from tax-exempt bond funds.
To keep reading John Franklin’s article, “Coronavirus Initial Impact on Tax-Exempt Capital Markets” via the Pearl Creek Advisors website, click here.
For more key insights on how senior living providers can effectively maintain marketing efforts amid COVID-19, see our special blog series and feel free to contact Tim Bracken at 410-207-0013. We’re always thinking, and we’re here to help.