2.3.3.1. Preliminary Official Statement
The preparation of the official statement, led by the financial advisor, is completed in two steps. The preliminary official statement describes the pertinent details of the bond issue before its price and interest rates have been determined. Once the pricing elements have been decided, they are added to the preliminary official statement, and the new document is published as the final official statement.
The preliminary official statement details the purposes and essential terms and conditions of the bond issue, such as:
• The loan amount
• The maturity structure of the bond (whether serial or term)
• Redemption provisions (if the bond is callable)
Other essential information includes:
• The financial and economic characteristics of the issuer
• The financial sources from which the securities will be repaid
• Any protective covenants that may accompany it
• The consequences in case the issuer defaults
• Legal matters such as pending proceedings that may affect the securities offered, legal opinions, and tax considerations
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