Quasi-Guaranteed Bonds

Description: Any bonds taxable or tax exempt may request to be enhanced with a quasi-guarantee from the State of Illinois. This credit enhancement, which requires approval of the Governor is referred to as the Moral Obligation. The Authority's act identifies a cure process in the case of borrower default. Upon borrower default, the Authority's Chairman can notify the Governor who can add the defaulted amount to the Illinois State Budget. Although there is no legal obligation for the Legislature to approve the funding rating agencies, such as Standard & Poors have rated this enhancement as one rating level below the State's overall bond rating. For example, if the State were Rated "AA+", Moral Obligation Bonds could be rated "A+".

Benefits: The benefits of Moral Obligation Credit Enhancement include:

• Credit Improvement - Moral Obligation could allow a non-rated borrower to "piggy-back on the State's financial strength to enhance their interest rate.

• Enhancement Blends - Moral Obligation could also supplement, replace or wrap around other credit enhancements, such as a letter of Credit, Bond Insurance, etc.

• Lower Interest Rate - Moral Obligation allows a company to receive rates below Prime Rate. Rates range well below conventional financing.

• Favorable Terms - There is no fixed minimum job creation or capital investment requirements, although some jobs have to be created.

Eligibility: Any qualified entity that utilizes bond financing from the Authority. Moral Obligation Bonds may require volume cap, carried over volume cap or no volume cap depending on the type of bond.

Fees: A $2,000 non-refundable application fee is due when the application is submitted. An issuance fee of 60 basis points and Professional fee of 20 basis points due at closing plus the cost of Issuer's legal counsel. Guidelines require an independent financial advisor to complete a report that is submitted to the Governor's office. This cost is generally $5,000, but increases with the project size.

Contact: For an application or additional information please contact Andrew Hamilton, Executive Director, Will Kankakee Regional Development Authority (WKRDA), Two Rialto Square, 116 N. Chicago Street, Joliet, Illinois 60432, Tel: 815/723-9070.

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