Peck, Shaffer & Williams LLP 1 Structure and Sale of Municipal Securities Matthias Edrich Kwali...

Peck, Shaffer & Williams LLP

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Structure and Sale ofMunicipal Securities

Matthias Edrich

Kwali FarbesJanuary 30, 2009


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Presenters

• Kwali Farbes, is a fourth year associate at Peck Shaffer with a focus on transaction structure, documents and disclosure

• Matthias Edrich, is a second year associate of Peck Shaffer with a focus on transaction structure, documents, disclosure and tax matters


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Types of Finance Structures

• General Obligation Bonds

• Revenue Bonds

• Lease Purchase Agreement with and without

• Certificates of Participation


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Financing Guidelines

• Financial Management

• Structuring and Marketing

• Legal

• Public Policy


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Typical Finance Team

● Issuer ● Issuer’s Counsel

● Bond Counsel ● Disclosure Counsel

● Financial Advisor ● Underwriter

● Underwriter’s Counsel

● Rating Agencies

● Insurer

● Trustee/Paying Agent/Registrar


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Issuer

The Issuer is the entity having legal authority to issue bonds.Issuers include:

• States and their agencies• Counties• Municipalities• School Districts• Special Districts• “On-behalf-of” entities


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Issuer’s Counsel

Issuer’s Counsel is to opine that the Issuer:

• has been legally established

• is authorized to execute its documents

• that all required procedures have been followed to approve the issuance of the Bonds


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Financial Advisor

The Financial Advisor:

• gives financial advice on structure and sale of the Bonds

• assists in obtaining the best rating on the Bonds• advises with respect to credit enhancement• lends knowledge about marketplace• advises with respect to Bond pricing


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Underwriter

The Underwriter may also:• give financial advice on structure and sale of the

Bonds• assist in obtaining the best rating on the Bonds• advise with respect to credit enhancement• lend knowledge about marketplace• advise with respect to Bond pricing• Public vs. Negotiated Sale of Bonds


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Underwriter’s Counsel

Underwriter’s Counsel:

• gives legal advice on disclosure• prepares or assists in the preparation of offering

document(s)• prepares Bond purchase agreement between Issuer and Underwriter• provides legal opinion that all disclosed information is

accurate and no material information is omitted


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Bond Counsel

The Bond Counsel (sometimes called Special Counsel):

• gives legal advice on structure of transaction• assists with election, if required• prepares relevant documents that create “contract” with Bond owners• provides legal opinion as to validity of Bonds under

state law and exemption of interest from federal andstate income taxes


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Disclosure Counsel

The Counsel engaged to provide the Issuer disclosure advice (sometimes called Disclosure Counsel):

• gives legal advice on disclosure• prepares or assists in the preparation of offering document(s)• prepares Bond purchase agreement between Issuer and

Underwriter• provides legal opinion that all disclosed information is accurate

and no material information is omitted

** Note that these duties are very much the same as those of Underwriter’s Counsel and many times are the same firm


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Rating Agencies

These are national companies recognized by industry as experts in analyzing credit worthiness. These agencies:

• assign letter grades to Bonds• designate the quality of credit and risks of

specific issues• monitor credit health of rated Issuers


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Credit Enhancement Providers

At this point in history, credit enhancers are not “red hot” commodities, but in more normal times they:

• provide third-party guarantees of payments to investors

• cause the Bonds to be designated with the highest ratings


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Trustee/Paying Agent/Registrar

Usually a bank performs one or more of these roles. There are various duties, but the primary duties include:

• making payments to the investors

• keeping records of all Bond owners

• protecting collateral


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Kwali Farbes and Matthias Edrich

Presenters’ Information

Peck, Shaffer & Williams LLPSuite 17001801 BroadwayDenver, Colorado 80202

(303) 296-3996 Main(877) 296-0333 WATTS (Toll Free)(303) 296-0344 Facsimile

[email protected]

[email protected]

www.peckshaffer.com

Peck, Shaffer & Williams LLP 1 Structure and Sale of Municipal Securities Matthias Edrich Kwali...

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