It’s essential to understand what a bond counsel does. In a formal sense, this refers to the lawyer who drafts the declaration that the government has the right to issue a municipal bond. A fresh municipal bond issuance is required to get the bond counsel’s statement.
Bond Counsel’s Role In Municipal Finance Transactions
In most bond issuances, some stakeholders are involved in the transaction. The underwriters, the issuer, the bond attorney, and the financial advisor are a few. These parties work together to ensure that bonds are issued and that proceeds are generated for the borrower in a particular project.
The tax status and enforceability of the bond, as well as the sale of the bonds, cannot succeed without the bond counsel’s opinion on the bond. This article will teach you about the development and background of bond counsel. You will also be familiar with the duties and brand-new obligations of the bond counsel.
Bond Counsel In The Past
Local and state governments contributed more than $250 million to building railroads throughout the industrial revolution. During this time, municipalities would issue bonds to the general public in exchange for railroad stock shares, and railroad promoters would solicit assistance from the general public. The railroad was either never built or was built somewhere else since these county authorities were frequently bought off to provide the bonds.
The issuance of these bonds gave rise to litigation, and it was discovered on multiple occasions that the legislative prerequisites for their issuance had not been met. As a result, buyers of these bonds began hiring attorneys familiar with all the legal processes to lower the danger of future litigation. The bonds were now readily accepted in the market because there were already lawyers in place.
Present-Day Bond Counsel
In providing legal views about the legitimacy of the underlying documents and bonds today, bond counsel is essential. Additionally, they will offer suggestions on how the interest should be determined. Current regulations for this kind of bond stipulate that the bond counsel must have a client they are acting on behalf of in a specific transaction.
The bond opinion provided by the bond counsel should be unqualified regardless of the situation or who the client is. It shouldn’t contain the standard exclusions found in a business transaction opinion. If those restrictions, presumptions, and conventional qualifications may be applied to the view, it is not regarded as qualified.
You should know that the opinion is merely one person’s opinion and may not represent expert judgment. Even for most applicable disclosure documents, most bond counsels will make the same claim.
Bond counsels can also do other tasks during the transaction, such as providing tax advice, creating the bond documents, reviewing the disclosure documents, helping with negotiations, and liaising with rating agencies. Additionally, the bond counsel can help the user construct post-issuance compliance and fulfill disclosure requirements.
To Sum Up
Bond counsels play a critical role in the day-to-day transactions that involve counties and municipalities. In addition to offering their opinion on these transactions, they are also engaged in the other crucial tasks mentioned above.