The date of delivery of a new issue of bonds, at which time the issuer delivers the bonds and the requisite legal documents to the underwriter or other bond purchaser in exchange for the purchase price.
Bond Purchase Agreement (“BPA”)
The Bond Purchase Agreement, or BPA, which may also be called a bond purchase contract, a purchase contract or a contract of purchase, is an agreement between the Issuer and/or Borrower and an Underwriter in which the Issuer agrees to sell the Bonds to the Underwriter at a stated purchase price, all subject to terms and conditions which must be met before the Bonds will be purchased by the Underwriter and issued by the Issuer. The Bond Purchase Agreement sets out the terms of the Bonds that the Underwriter is purchasing and the conditions for the Closing.
The BPA may include terms that require the Underwriter to send the Issuer a Good Faith Deposit to be held by the Issuer until the Closing, representations and warranties of the parties, “outs” that dictate the reasons one party or both can terminate the issuance by the Issuer, and the purchase by the Underwriter, of the Bonds, and the documents that are required to be delivered prior to the Closing. In a Conduit Financing, often the Borrower is also a party to the BPA. Much of the information necessary to produce the Closing documents will be found in the BPA. Frequently, the BPA includes exhibits of the form of the certificates (e.g., Closing certificate of the Issuer, incumbency certificate of the Issuer and certificate of the Borrower) that will be delivered by the parties and the opinions that will be delivered by the various counsel (e.g., supplemental opinion of Bond Counsel, opinion of Disclosure Counsel and opinion of Underwriter’s Counsel) and enumerates which documents are to be provided by which parties to the financing and the provisions to be included in the documents. The form of the certificates and opinions included as exhibits to the BPA allows the parties to negotiate the language of those documents ahead of time rather than waiting until the Bonds have priced or waiting until the days right before the Closing when there are timing sensitivities.
Get it in Writing
Learn more about the various documents involved in a municipal securities transaction.