The OS uses the POS as its base document and fills in all the information that was not known when the POS was produced. This information includes, but is not limited to:
- Each maturity date’s par value
- Each maturity date’s coupon
- Each maturity date’s yield or price (usually not both) based on what the borrower wishes to show in the document.
- Each maturity date’s CUSIP number
- Credit rating of the bond issue
- Sinking fund dates and par value amounts if there are mandatory sinking fund payments
- The final purchase price of the bonds
Both the POS and OS are verified by bond counsel.
Information in the OS includes, but is not limited to:
- Description of the project being financed — the project type, expected completion date, and so on — or the bonds being refinanced
- Finalized bond security information, such as maturity dates, par value, coupons, yields, and call date, if applicable
- Security of financing such as general obligation or revenue bond as well as the source of the security, such as taxes or project revenues
- Bond issuance credit rating information
- Other debts the issuer has outstanding
- The flow of funds in the transaction
- Management information
- Planned future financings
- Financial and demographic information pertaining to the issuer
- Litigation outstanding against the issuer
The investor must be informed of any major discrepancy or event that occurs between the OS and POS issuances or the period between the bonds’ sale and the delivery dates. A physical or electronic “sticker” is attached to the OS describing the change.
The final official statement must be delivered to the investor prior to the delivery date of the bonds. This delivery can be in either hardcopy or electronic form. The Municipal Securities Rulemaking Board (MSRB) must receive a copy of the OS within 25 days of the sale of the bonds so it may be posted on EMMA, the nationally recognized municipal securities information repository.
What’s important here?
Investors must be given finalized hardcopy or electronic documentation on the bonds they purchased prior to the delivery of the bonds. The Official Statement is the main document explaining all the relevant information pertaining to the bond transaction. The Official Statement is also posted on EMMA so information about the bonds is publicly available.
