Sector Profiles
Human Service Providers
ACA insures bonds issued to benefit providers of services for the disadvantaged and the disabled. Covering a broad spectrum of programs including educational and vocational training, day and residential treatment, counseling and case management, these non-profit agencies offer mandated services, most often in the least restrictive setting possible. The transactions we insure are for established entities with a history of continued funding.
Key Credit Factors
In order to make a preliminary determination of insurability, ACA Capital will review the Human Service Provider for the following key characteristics:
- Services Provided - including essentiality, demand and diversity
- Competition
- History of funding relationships
- Funding and oversight mechanisms in the State(s)
- Management
- Financial Performance - including assessment of liquidity, debt coverage, and debt burden
Key Legal and Covenant Provisions
Typical security and covenant provisions for ACA Capital insured Human Service Providers financings include the following:
- Pledge of gross revenues or general obligation of Provider
- Mortgage
- Fully funded debt service reserve fund
- Rate Covenant - Minimum of 1.25x Maximum Annual Debt Service
- Restrictions on additional borrowing as appropriate
- Liquidity Covenant measured in Days Cash on Hand as appropriate
Essential Documentation
The following information is essential for an ACA Capital review of a proposed Human Service Provider financing:
- Preliminary Official Statement
- Financing Documents
- Sources and Uses
- Feasibility study for new construction
- Five years of audited financial statements
- Description of provider - history and services, organizational structure
- Market data including list of competitors and market share
- Historical utilization statistics
- Five year breakout of revenue by source and by program
- Description of major funding sources
- Relevant information regarding state service mandates and associated funding
- Relevant information regarding oversight and copies of the most recent reports
