Public Finance Credit Enhancement

Orrick is one of the few law firms in the country which offers the level and mix of expertise in all areas necessary to provide effective representation to credit enhancers of government obligations, such as banks, insurance companies, pension funds, sureties or other financial institutions. Our Public Finance Credit Enhancement practice combines the expertise of our commercial finance practice with our public finance bond counsel practice (generally ranked number one in the country) to offer a credit enhancer expert advice regarding legal issues relating to creditors' rights in general and with respect to public entities in particular.

Public entities are governed by different laws and have very different rights and obligations than private borrowers. For example, unlike private borrowers, public entities have few implied powers (instead, generally, only those specifically granted by statute), significant limitations on their ability to incur debt and other liabilities (including indemnities and other contingent liabilities), restrictions on remedies that may be enforced against them, different (and not always clear) rules governing the perfection of security interests and separate bankruptcy statutes. In addition, while private obligations are generally backed by the general credit of the obligor or specific collateral, a vast array of limited obligation security structures are employed by public entities to comply with or avoid their peculiar legal restrictions.

Attorneys in our Public Finance Credit Enhancement Group have considerable experience in such areas as:

• public finance
• insurance and suretyship law
• environmental law
• letters of credit and liquidity facilities
• securities law
• secured transactions
• restructuring
• bankruptcy
• interest rate swaps and derivatives
• bank regulation (including capital adequacy requirements)

The firm also draws upon the considerable expertise of our Troubled Transactions group, and our top-ranked real estate department, structured finance department and project finance department -- areas of law that have become increasingly important to lenders and other providers of credit and which are often drawn upon in public finance transactions.

Given these specialties, when the use of credit enhancement devices for municipal bonds suddenly became commonplace during the 1980s, it was natural that Orrick would be called upon to represent a number of providers in transactions across the country. Representative clients in these areas include:

• Algemene Bank Nederland N.V. (ABN AMRO Bank N.V.)
• American Municipal Bond Iyndemnity Corporation (AMBAC)
• Banco Santander
• Bank of Nova Scotia
• Bank of Montreal
• Bank Austria
• Banque Nationale de Paris
• Banque Paribas
• Bayerische Hypo-und Vereinsbank AG
• California State Teacher's Retirement System
• Canadian Imperial Bank of Commerce
• Capital Guaranty Insurance Company (Cap. Guaranty)
• Commerzbank Aktiengesellschaft
• Cooperatieve Centrale Raiffeisen-Boerenleenbank, B.A. (Rabobank Nederland)
• Credit Locale de France
• The Dai-Ichi Kangyo Bank, Limited
• Dresdner Bank AG
• Financial Guaranty Insurance Company (FGIC)
• First Union National Bank
• First Nationwide Bank
• Fleet Bank
• The Fuji Bank, Limited
• The Industrial Bank of Japan, Limited
• Kredietbank N.V.
• Landesbank Hessen-Thuringen Girozentrale
• The Long-Term Credit Bank of Japan, Limited
• Morgan Guaranty Trust Company
• National Westminster Bank Plc
• The Sanwa Bank California
• Student Loan Marketing Association
• The Sumitomo Bank, Limited
• The Toronto-Dominican Bank
• Union Bank of Switzerland
• Wells Fargo Bank, N.A.
• Westdeutsche Landesbank Girozentrale

The types of debt for which we have represented these clients include: private activity bonds; bonds for not-for-profit organizations; public infrastructure bonds; lease/certificates of participation; public enterprise revenue bonds; general obligation bonds and notes; tax increment bonds; sales tax bonds; tax and revenue anticipation notes; derivative products and other financing instruments. In addition to reviewing the bond documents to ensure that the client credit provider's rights are protected, we have prepared and negotiated the credit or liquidity facility or other financing documents, including:

• letters of credit and reimbursement agreements
• standby purchase agreements
• revolving credit agreements
• pledge and collateral agreements
• participation agreements
• investment agreements
• swaps, puts, options, caps, floors and other similar agreements
• deeds of trust and other mortgage documents

We have been instrumental in structuring innovative bond and lending transactions on behalf of our credit enhancement clients as well as aiding some of those clients on work-outs, including the divestiture or sale of non-performing assets. Our unique position in the public finance market allows us to not only respond to our clients needs but also to add value to the transaction.