Understanding who a bond counsel is very crucial. Technically, this is an attorney who prepares the official opinion saying that the government is authorized to give out a municipal bond. A new issue of the municipal bond is needed to acquire the bond counsel’s statement.
Role of Bond Counsel in Finance Transactions for the Municipal
The majority of the bond issuances have different parties involved in the transaction. These include the underwriters, the issuer, the bond counsel and also the financial advisor. These parties are there to collaborate and ensure they issue bonds and also come up with proceeds for the borrower in a given project.
However, if the bond counsel does not give his opinion on the bond, the tax status and the enforceability of the bond cannot be successful, and the bond sale cannot happen. Here you are going to learn of the evolution and history of bond counsel. You are also going to be aware of the responsibilities and new functions of the bond counsel.
Bond Counsel There Before
In the industrial revolution period, local and state governments distributed more than $250 million for railroads to be constructed. During this time, the railroad promoters would ask the public for help, and the municipalities would give out bonds to the public in exchange for railroad stock shares. Most are the times when these county officials would be bribed so that they can issue the bonds hence the railroad was never constructed or was constructed somewhere else.
Litigation cropped up regarding the issuance of these bonds, and in several occasions, it was found that the statutory requirements for these bonds to be issued were not met. So to reduce the risk of subsequent litigation, purchasers of these bonds started engaging lawyers who knew all the legal procedures. With lawyers already in place, the bonds were now readily accepted in the bonds market.
Bond Counsel Nowadays
Today, bond counsel is a very crucial person in giving legal opinions regarding the validity of the underlying documents and bonds. They will also give their advice on how the interest should be calculated. In the modern rules for this type of bond, the bond counsel ought to have a client whom they are representing in a particular transaction.
It does not matter the circumstances at hand, determining who the client is, the bond opinion given by the bond counsel ought to be unqualified. It should not have the typical exceptions that are observed in a commercial transaction opinion. To be considered unqualified, the view can be curtailed by those limitations, assumptions and customary qualifications.
However, you should note that the opinion is not a guarantee of the outcome or maybe a professional judgment. Most of the bond counsels will even state the same thing for most of the applicable disclosure documents.
Additionally, bond counsels can also undertake other functions during the transaction such as rendering tax advice, preparing the bond documents, reviewing the disclosure documents, assisting in the negotiations and also interacting with the agencies for rating. The bond counsel can also create post-issuance compliance and help the user in carrying on with disclosure obligations.
Bond counsels are very crucial in the day to day transactions involving counties and municipalities. Apart from rendering their opinion on these transactions, they are also involved in other vital duties as described above.