2.4.8.1 Events of Default

“Events of Default” may include the following:

Payment default. A failure by the public agency to make a scheduled debt service payment
Covenant default. A failure by the public agency to comply with its covenants, other than a payment default. The failure may be required to be material and the public agency is generally allowed a period of time (e.g., 30 days) to cure or remedy a default before it becomes an Event of Default.
Bankruptcy, insolvency, or other general financial failure by the public agency.

“Events of Default” may also include events that do not reflect “fault” on the part of the public agency but for which it is important to bondholders to be able to exercise remedies. These can include defaults by conduit borrowers, failures of credit or liquidity providers (unless replaced), credit changing events that are “events of default” under credit agreements, changes in law, and changes in organization. These events are often called “Mandatory Redemption Events.” Under the terms of a lease, an abatement or non appropriation of funds to pay the lease may not be a legal default but would likely be considered a “default” by the investor.