Officials from Connecticut's quasi-public bonding agency say they expect activity to be a bit slower in fiscal year 2011, as jittery investors make interest rates less attractive for prospective borrowers.
The Connecticut Health and Educational Facilities Authority (CHEFA), the state's self-funded, quasi-public agency that issues tax-exempt bonds on behalf of nonprofit institutions, has issued about $300 million in bonds so far this fiscal year and will likely issue between $800 million to $1 billion in total bonds by the end of its fiscal year on June 30.
In fiscal 2010, CHEFA issued about $1.1 billion in bonds spread over 15 deals, said Jeffrey Asher, CHEFA's executive director.
Asher said higher interest rates are making it less attractive for borrowers to refinance, which has slowed deal flow, particularly among higher education institutions. Interest rates in the municipal bond market have been rising amid fears about state and local government finances and governments' ability to meet debt obligations.
"The municipal bond market hasn't been doing as well," Asher said. "Interest rates are higher. If institutions are going to refinance and lose money, they aren't going to refinance."
CHEFA, which is based in Hartford, issues bonds that give nonprofits access to low-cost financing in public municipal markets. CHEFA's clientele includes hospitals, colleges and universities, independent schools, and human service and child care providers.
Although Asher said he expects bond issuances to decline in fiscal 2011, one sector in particular appears to be more active: health care.
There are several bond issuances in the pipeline, including a potential $400 million offering from Hartford Healthcare and a $125 million offering from Danbury Hospital.
Asher said hospital plants in Connecticut are aging, so health care providers are seeking financing to upgrade their facilities. That includes improvements for new emergency departments, especially as patient flow continues to rise. Danbury Hospital, for example, is preparing to break ground on a $150 million project that will add about 300,000 square feet of new construction to the hospital's existing campus.
"A lot of hospitals are looking at the need to improve and expand their emergency rooms," Asher said.
In 2010, the lion's share of bond activity was from higher education institutions, Asher said, but there is less movement in that sector right now, particularly as colleges and universities face budget crunches. Higher education accounted for $843 million in total bonding in 2010.
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The Connecticut Development Authority recently approved a 10-year, $350,000 direct loan to help Aperture Optical Sciences Inc. to buy equipment and establish manufacturing operations in Durham. The company is a high-tech start-up that produces custom precision optical components.
The Department of Economic & Community Development is also chipping in with an additional $350,000 in financing.
Aperture Optical Sciences is a newly formed subsidiary of Flemming Tinker Inc., an independent engineering and consulting firm.
Aperture's principal products are silicon carbide optics, aspheric mirrors and lenses, laser optics and opto-mechanical assemblies used in aerospace, defense, astronomy, semiconductor, and scientific imaging applications. The company's customers use optics in high energy lasers, rangefinders, night vision, thermal imaging, optical lithography and a variety of different scientific research applications.
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The top senior executive of Southern Connecticut Bancorp has quit, nearly six months after the bank's planned merger with a nearby competitor was rejected by industry regulators.
John H. Howland notified the banking company's board of directors earlier this month that he was resigning as the company president, effective April 8.
Southern Connecticut Bancorp, which is the parent company of The Bank of Southern Connecticut, has appointed Sunil Pallan, 49, as interim president. Pallan will continue to hold his current title senior vice president and chief credit officer.
The Bank of Southern Connecticut agreed last year to a $19.5 million merger with Naugatuck Valley Financial, but the deal fell apart after failing to win regulatory approval.
The company reported a $1.4 million loss in 2010, as a steep rise in reserves to cover troubled loans cut into the bank's bottom line.
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Middletown-based Liberty Bank is providing nearly $6 million in financing for a 93-unit apartment complex in Springfield, Mass.
The 10-year, fixed rate mortgage will be used to pay off existing debt on the Park Edge Apartments, a 93-unit complex originally built in 1962 that has undergone numerous renovations and upgrades over the years.
The property is managed by Konover Residential Corp., a division of The Simon Konover Company in West Hartford.
CB Richard Ellis's capital markets Hartford group helped secure the financing.
Greg Bordonaro writes the Financial Sense column every other week. Reach him at gbordonaro@HartfordBusiness.com.