An introduction to debt securities - Revision history

imported>Doug Williamson: Update for LIBOR transition.

2022-04-25T21:06:19Z

Update for LIBOR transition.

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	=====3.2.3 Terms and conditions of the Eurobonds=====		=====3.2.3 Terms and conditions of the Eurobonds=====
	The listing requirements require details of the bonds and will include the following; amount, currency, interest rate or margin above a reference rate ~~(e.g. Libor)~~, interest payment dates, redemption amount, terms of early redemption (if possible), events of default, selling restrictions, governing law and taxation.		The listing requirements require details of the bonds and will include the following; amount, currency, interest rate or margin above a reference rate, interest payment dates, redemption amount, terms of early redemption (if possible), events of default, selling restrictions, governing law and taxation.

	=====3.2.4 Issuer’s description=====		=====3.2.4 Issuer’s description=====

imported>Doug Williamson: Correct typo, Auditors header.

2016-06-12T12:57:50Z

Correct typo, Auditors header.

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	====2.8 Depository====		====2.8 Depository====
	The depository keeps the bonds on behalf of the clearing system and is usually a bank however in certain circumstances the depository (or “safekeeper”) will be Euroclear or Clearstream.		The depository keeps the bonds on behalf of the clearing system and is usually a bank however in certain circumstances the depository (or “safekeeper”) will be Euroclear or Clearstream.
	2.9 Auditors
			====2.9 Auditors====
	Usually the manager will require a “comfort” letter from the issuer’s auditors stating that the financial information in the prospectus has been correctly extracted from the audited financial statements and the issuer’s financial systems and that nothing has caused the auditors to believe that there have been decreases in assets or increases in liabilities of the issuer compared with the financial information disclosed.		Usually the manager will require a “comfort” letter from the issuer’s auditors stating that the financial information in the prospectus has been correctly extracted from the audited financial statements and the issuer’s financial systems and that nothing has caused the auditors to believe that there have been decreases in assets or increases in liabilities of the issuer compared with the financial information disclosed.

imported>Doug Williamson: /* Comparing the US and Eurobond markets */ Adding titles

2016-03-23T15:21:33Z

Comparing the US and Eurobond markets: Adding titles

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	! colspan="3" style="color:#48001f; font-size:18px; background:none" \| '''Table 1: Comparing the US and Eurobond markets'''		! colspan="3" style="color:#48001f; font-size:18px; background:none" \| '''Table 1: Comparing the US and Eurobond markets'''
			\|-
			\| style="background:none"\|
			\| style="background:none"\|'''Advantages'''
			\| style="background:none"\|'''Disadvantages'''
	\|-		\|-
	\| style="background:#e9d7e0"\|US/Yankee/144A/private placements		\| style="background:#e9d7e0"\|US/Yankee/144A/private placements
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	* MTN programme expensive to set up and can involve significant management time if renewed each year		* MTN programme expensive to set up and can involve significant management time if renewed each year
	\|}		\|}


	==Pricing of debt securities==		==Pricing of debt securities==

imported>Jeeten.patel@thinkpublishing.co.uk at 14:02, 20 October 2015

2015-10-20T14:02:59Z

← Older revision		Revision as of 14:02, 20 October 2015
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	====2.4 Trustee or fiscal agent====		====2.4 Trustee or fiscal agent====
	The issuer may appoint a trustee to represent the interests of the ~~bond-holders~~. A Trust Deed will set out the powers and duties of the trustee, which is likely to be a professional company. The trustee is the interface between the issuer and the investors. The advantages for the issuer are:		The issuer may appoint a trustee to represent the interests of the bondholders. A Trust Deed will set out the powers and duties of the trustee, which is likely to be a professional company. The trustee is the interface between the issuer and the investors. The advantages for the issuer are:
	* the issuer only needs to deal with one entity rather than the potentially many bondholders; and		* the issuer only needs to deal with one entity rather than the potentially many bondholders; and
	* the trustee usually has power to waive defaults if not material and agree minor amendments to the bond terms without consulting each and every bondholder, thus leading to greater flexibility and speed.		* the trustee usually has power to waive defaults if not material and agree minor amendments to the bond terms without consulting each and every bondholder, thus leading to greater flexibility and speed.

imported>Jeeten.patel@thinkpublishing.co.uk at 11:40, 20 October 2015

2015-10-20T11:40:27Z

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imported>Jeeten.patel@thinkpublishing.co.uk at 10:48, 20 October 2015

2015-10-20T10:48:34Z

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imported>Doug Williamson: Protected "An introduction to debt securities" (‎[edit=sysop] (indefinite) ‎[move=sysop] (indefinite))

2015-07-27T12:56:33Z

Protected "An introduction to debt securities" (‎[edit=sysop] (indefinite) ‎[move=sysop] (indefinite))

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Revision as of 12:56, 27 July 2015

imported>Jeeten.patel@thinkpublishing.co.uk at 11:36, 24 November 2014

2014-11-24T11:36:21Z

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imported>Jeeten.patel@thinkpublishing.co.uk at 16:36, 1 November 2014

2014-11-01T16:36:06Z

← Older revision		Revision as of 16:36, 1 November 2014
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	* less onerous terms – in order to maximise the liquidity of an issue of debt securities, the terms of the issue are kept as straightforward as possible. Covenants and events of default are standardised to a greater degree than in loan documentation and are nearly always less onerous for the company. An investor in debt securities will be chiefly interested in the issuer’s overall financial standing; and		* less onerous terms – in order to maximise the liquidity of an issue of debt securities, the terms of the issue are kept as straightforward as possible. Covenants and events of default are standardised to a greater degree than in loan documentation and are nearly always less onerous for the company. An investor in debt securities will be chiefly interested in the issuer’s overall financial standing; and
	* higher profile – an issue of securities is an opportunity for a company to raise its own profile. While a privately placed issue will receive little or no publicity, an offering of securities to the market at large puts a spotlight on the issuing company, its financial condition and its corporate strategy. Set against the advantages of an issue of securities there are also considerations which tend to be in the opposite direction and which need to be borne in mind when weighing the pros and cons of this method of finance. These include:		* higher profile – an issue of securities is an opportunity for a company to raise its own profile. While a privately placed issue will receive little or no publicity, an offering of securities to the market at large puts a spotlight on the issuing company, its financial condition and its corporate strategy. Set against the advantages of an issue of securities there are also considerations which tend to be in the opposite direction and which need to be borne in mind when weighing the pros and cons of this method of finance. These include:
	~~: #~~ Disclosure – commercial banks lending to a company will often already be familiar with its business and will themselves investigate its financial condition. Even where a loan is to be syndicated, a short information memorandum will usually suffice. By contrast, investors in debt securities will not have direct access to the company and will rely on information provided by the company to the market in general. For a listed issue this will be supplied in the listing particulars or in a prospectus (and the level of disclosure will be prescribed by the rules of listing authority/ stock exchange) but even for an unlisted issue a prospectus or other disclosure document will usually be produced. Investors will expect any such document to contain a relatively detailed description of the company. The process of producing and checking this description is often called “due diligence”. It can be a time-consuming affair both for the issuer and for its investment banking advisers. If an issue is to be wholly or partly placed in the US, the due diligence process is much more rigorous because of the perceived higher liability risks and the consequent higher disclosure requirements and can significantly increase the cost of the issue.		* Disclosure – commercial banks lending to a company will often already be familiar with its business and will themselves investigate its financial condition. Even where a loan is to be syndicated, a short information memorandum will usually suffice. By contrast, investors in debt securities will not have direct access to the company and will rely on information provided by the company to the market in general. For a listed issue this will be supplied in the listing particulars or in a prospectus (and the level of disclosure will be prescribed by the rules of listing authority/ stock exchange) but even for an unlisted issue a prospectus or other disclosure document will usually be produced. Investors will expect any such document to contain a relatively detailed description of the company. The process of producing and checking this description is often called “due diligence”. It can be a time-consuming affair both for the issuer and for its investment banking advisers. If an issue is to be wholly or partly placed in the US, the due diligence process is much more rigorous because of the perceived higher liability risks and the consequent higher disclosure requirements and can significantly increase the cost of the issue.
	~~: #~~ Higher fees – while the interest rate (often referred to as the “coupon”) on an issue of securities will generally be lower than on a corresponding term loan, it will usually be more expensive to arrange the transaction (unless there is an existing programme). Most companies will need to retain the services of an investment bank to help document and sell the issue and, if a wide distribution is essential or a large amount is to be raised on an underwritten basis, more than one will be required. The fee structure will reflect the tasks that the investment banks are asked to perform. A simple private placement may involve only a single arrangement fee. A syndicated underwritten issue will involve management and underwriting commissions (usually combined in a single fee) and perhaps also selling concessions or placement fees to encourage distribution. Typically, the fees will be expressed as a percentage of the face amount of the securities.		* Higher fees – while the interest rate (often referred to as the “coupon”) on an issue of securities will generally be lower than on a corresponding term loan, it will usually be more expensive to arrange the transaction (unless there is an existing programme). Most companies will need to retain the services of an investment bank to help document and sell the issue and, if a wide distribution is essential or a large amount is to be raised on an underwritten basis, more than one will be required. The fee structure will reflect the tasks that the investment banks are asked to perform. A simple private placement may involve only a single arrangement fee. A syndicated underwritten issue will involve management and underwriting commissions (usually combined in a single fee) and perhaps also selling concessions or placement fees to encourage distribution. Typically, the fees will be expressed as a percentage of the face amount of the securities.
	~~: #~~ Other up-front expenses – the issuer will also be expected to pay the costs of any listing or rating of the securities and will have to pay the fees and expenses of the paying agents and any trustee for the holders throughout the life of the issue. There will also be the cost of printing the prospectus or other selling document (where one is produced) and of security-printing the securities where they are being issued in definitive bearer form. The issuer will also need to budget for the accountants’ and lawyers’ fees and expenses involved in the checking of its financial condition, the due diligence process and the production of the legal documentation.		* Other up-front expenses – the issuer will also be expected to pay the costs of any listing or rating of the securities and will have to pay the fees and expenses of the paying agents and any trustee for the holders throughout the life of the issue. There will also be the cost of printing the prospectus or other selling document (where one is produced) and of security-printing the securities where they are being issued in definitive bearer form. The issuer will also need to budget for the accountants’ and lawyers’ fees and expenses involved in the checking of its financial condition, the due diligence process and the production of the legal documentation.
	~~: #~~ Less flexibility – the covenants and events of default for an issue of securities will usually be lighter than for a loan. However, a company can always seek a waiver from the provisions of its loans or even enter into negotiations to reschedule them. It is considerably more difficult to modify the terms of a debt security. If it is in bearer form, the company will usually not know the identity of the holders. In any event, an issue of securities will typically be held by a large number of different investors and, if the issue is liquid, the investors may be changing from day-to-day. Save in the case of ECP, the terms of the issue will provide for the convening of a meeting of holders or their representatives and for the passing of a resolution that will bind all the holders. But because of the publicity involved in convening a meeting and the high quorum and voting requirements on which the market insists, this is often not a practical option for the issuer. Appointing a trustee for the holders of the securities as part of the issuance structure can increase the flexibility of an issue of debt securities, but for more significant waivers or alterations, a trustee will nevertheless usually insist on a meeting of holders being convened. The advantages and disadvantages of appointing a trustee are discussed later under the heading “Documentation of debt securities”.		* Less flexibility – the covenants and events of default for an issue of securities will usually be lighter than for a loan. However, a company can always seek a waiver from the provisions of its loans or even enter into negotiations to reschedule them. It is considerably more difficult to modify the terms of a debt security. If it is in bearer form, the company will usually not know the identity of the holders. In any event, an issue of securities will typically be held by a large number of different investors and, if the issue is liquid, the investors may be changing from day-to-day. Save in the case of ECP, the terms of the issue will provide for the convening of a meeting of holders or their representatives and for the passing of a resolution that will bind all the holders. But because of the publicity involved in convening a meeting and the high quorum and voting requirements on which the market insists, this is often not a practical option for the issuer. Appointing a trustee for the holders of the securities as part of the issuance structure can increase the flexibility of an issue of debt securities, but for more significant waivers or alterations, a trustee will nevertheless usually insist on a meeting of holders being convened. The advantages and disadvantages of appointing a trustee are discussed later under the heading “Documentation of debt securities”.

	==Key bond markets==		==Key bond markets==

imported>Jeeten.patel@thinkpublishing.co.uk: Jeeten.patel@thinkpublishing.co.uk moved page An Introduction To Debt Securities to An introduction to debt securities

2014-10-08T09:41:58Z

Jeeten.patel@thinkpublishing.co.uk moved page An Introduction To Debt Securities to An introduction to debt securities

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Revision as of 09:41, 8 October 2014