When must debt service payments be made for conduit bonds?

The timing of debt service payments for conduit bonds is primarily determined by the conduit borrower. In a conduit financing arrangement, the issuing authority (such as a municipality) issues bonds to raise funds for a specific project, and the proceeds are loaned to a conduit borrower (typically a nonprofit or a private entity).

The terms of the bond dictate that the conduit borrower assumes the responsibility for making the debt service payments, which include both interest and principal repayment. These payments are typically structured to align with the revenues generated by the project for which the bonds were issued. Thus, the flexibility granted to the conduit borrower in determining the payment schedule is essential, as it allows them to manage financial obligations in concert with their cash flow and operational needs.

The other options presented do not accurately reflect the nature of conduit bonds. Debt service payments are closely aligned with the project's operational income rather than simply being tied to project completion timelines, issuer schedules, or authorization processes. This unique characteristic underscores the importance of the conduit borrower's role in managing the timing of payments.