This is purchased from a specialized insurance company. This is a form of credit enhancement. The underwriter or other advisors involved in the issue will determine whether it is cost-effective to use bond insurance. The purchase of bond insurance results in the highest credit rating for the bonds. Another form of credit enhancement is a letter of credit which lends itself only to certain kinds of borrowing.
Some issuers retain an independent financial advisor when they borrow.
A truly independent financial advisor will not be eligible to buy the bonds and is discussed further below. The typical role of this player is to give advice on the financial aspects of the deal and to prepare the official statement and any preliminary official statement. Bond counsel is a recognized expert in the state and federal law relating to governmental borrowing. Bond counsel is designated by the issuer and has a duty to give an impartial opinion on the effectiveness of the bonds and the taxability of the bonds. In addition, it is the bond counsel that drafts and assembles most of the documentation and coordinates the deal.