8.1.1 Bond Documents

Examples of bond documents most relevant to the use of bond funds include bond indentures, lease agreements, ordinances, and resolutions relating to rights, obligations, and remedies protecting bondholders. The documents include provisions that control the administration of bond funds, such as the security pledge, flow of funds, disbursements (i.e., requisitions or officer certificates), redemption, credit enhancement, permitted investments, and various issuer specific debt covenants. See Chapter 2, Debt Structures: What Factors Drive Structuring Decisions?

In certain types of debt financings, there are legal documents other than an indenture that control the administration of bond funds. For example, in a Mello Roos financing there may be an acquisition or funding agreement allowing the public agency to purchase a built facility.123 When multiple agencies are involved, and the bond proceeds are to be allocated to another public entity, there may be a joint community facilities agreement. In the case of a conduit issuance, a loan agreement may cover some of the uses of funds.