Prepayment options are important. Issuers want to see redemption provisions that allow bonds to be called and paid without penalty in no more than five years, unless there is a good reason for a longer time. The ability to prepay enables the issuer to look at potential savings from a later refinancing. Where Issuers Can Get their Confidence Issuers first need to understand the role of the underwriter and the independent financial advisor. An underwriter can give financial advice and is often used to do so.
Many issuers use their underwriters as financial advisors.
Established or new relationships with underwriters give some issuers confidence that they are getting their best deal or a sufficiently good deal to get both financial advice and underwriting from one institution. However, for an underwriter to be an independent financial advisor, it must agree to be ineligible to underwrite the bonds being issued. An independent financial advisor has no interest in who does the underwriting and is supposed to look for the best financial arrangement for the issuer. Some underwriters, if asked, will agree to serve as an independent financial advisor. There are also organizations in the business of giving financial advice, only.