SGS 7: Issuing and Listing Bonds
2 separate stages
1. “admission to listing” of the bonds on the “Official List” held by the UK Listing Authority (‘UKLA’) and
2. “admission to trading” of the bonds on the London Stock Exchange (‘LSE’).
Learning Outcomes
1. Factors that could affect timing of bond issue: stages and timetable [flexible]
(1) Seasoned issuer or first-time issuer?
First-time issuer: lengthen timetable -> more investor road shows
Seasoned: will have a Medium Note Programme in place; faster time-table
(2) Will the bonds be listed?
If yes -> lengthens timetable bcs of disclosure requirements + liaise w/t UKLA
If no -> shorter timetable
(3) Type of bond: plain vanilla or special features?
Special features (i.e convertible): lengthens timetable bcs of complex docs
(4) Credit-rating of issuer
If it’s below investment grade -> more effort needed to generate investor interest in bond
Lengthens time-table
(5) Negotiation between parties
Parties could completely depart from initial terms of bond issue; or
Complexities come to light after the term sheet that cause delay
(6) Structure of bond (Fiscal Agent or Trustee?)
Trustee structure: extra docs and negotiation
(7) Extent of comments from UKLA
The more comments -> the more adverse timing
That’s why it’s important that sufficient disclosure is made at the outset
(8) Profile of issuer
High-profile issuer = less effort to give investor road shows
Local listing requirements -> have their own particular rules -> some are more onerous than others
That’s why it’s important to consider the LDPT rules => Harmonisation of listing requirements in EEA countries!
Ultimately -> Lead Manager and lawyers need to plan accordingly + anticipate that UKLA approval will be longer for a first-time
bond issuer, especially if bond will have special features.
2. Procedure for issuing a listed bond;
(1) ‘Confirmation to Managers’ sent by lead manager to co-managers
communication confirming lead manager’s and co-managers’ participation in bond issue
-> ex: underwritten on a joint and several basis
(1) Confirmation to Managers + (2) Term Sheet + (3) Initial Syndicate Communication
contain material terms of issue & other info allowing managers to confirm their participation:
1. names of managers in syndicate
2. respective underwriting commitments
3. allotment info
4. commercial terms of bond issue
5. documentation considerations (i.e bonds issued on standalone basis or part of program?)
‘pre-selling’ = managers then start seeking investors to sell them bonds
(1.1) Reasons for listing bond ? (advantages)
Not all Eurobonds are listed -> but: listing Eurobond makes it more marketable (easy to sell/lower interest):
1. Since investors know listing requirements have been met with -> makes them more confident in the quality of
eurobond;
2. access to institutional investors (biggest buyers of eurobonds) - required to hold most/all their investments in listed
securities; and
3. benefit from ‘quoted eurobond exemption’
-> UK issuers can pay interest-free of withholding tax
2 separate stages
1. “admission to listing” of the bonds on the “Official List” held by the UK Listing Authority (‘UKLA’) and
2. “admission to trading” of the bonds on the London Stock Exchange (‘LSE’).
Learning Outcomes
1. Factors that could affect timing of bond issue: stages and timetable [flexible]
(1) Seasoned issuer or first-time issuer?
First-time issuer: lengthen timetable -> more investor road shows
Seasoned: will have a Medium Note Programme in place; faster time-table
(2) Will the bonds be listed?
If yes -> lengthens timetable bcs of disclosure requirements + liaise w/t UKLA
If no -> shorter timetable
(3) Type of bond: plain vanilla or special features?
Special features (i.e convertible): lengthens timetable bcs of complex docs
(4) Credit-rating of issuer
If it’s below investment grade -> more effort needed to generate investor interest in bond
Lengthens time-table
(5) Negotiation between parties
Parties could completely depart from initial terms of bond issue; or
Complexities come to light after the term sheet that cause delay
(6) Structure of bond (Fiscal Agent or Trustee?)
Trustee structure: extra docs and negotiation
(7) Extent of comments from UKLA
The more comments -> the more adverse timing
That’s why it’s important that sufficient disclosure is made at the outset
(8) Profile of issuer
High-profile issuer = less effort to give investor road shows
Local listing requirements -> have their own particular rules -> some are more onerous than others
That’s why it’s important to consider the LDPT rules => Harmonisation of listing requirements in EEA countries!
Ultimately -> Lead Manager and lawyers need to plan accordingly + anticipate that UKLA approval will be longer for a first-time
bond issuer, especially if bond will have special features.
2. Procedure for issuing a listed bond;
(1) ‘Confirmation to Managers’ sent by lead manager to co-managers
communication confirming lead manager’s and co-managers’ participation in bond issue
-> ex: underwritten on a joint and several basis
(1) Confirmation to Managers + (2) Term Sheet + (3) Initial Syndicate Communication
contain material terms of issue & other info allowing managers to confirm their participation:
1. names of managers in syndicate
2. respective underwriting commitments
3. allotment info
4. commercial terms of bond issue
5. documentation considerations (i.e bonds issued on standalone basis or part of program?)
‘pre-selling’ = managers then start seeking investors to sell them bonds
(1.1) Reasons for listing bond ? (advantages)
Not all Eurobonds are listed -> but: listing Eurobond makes it more marketable (easy to sell/lower interest):
1. Since investors know listing requirements have been met with -> makes them more confident in the quality of
eurobond;
2. access to institutional investors (biggest buyers of eurobonds) - required to hold most/all their investments in listed
securities; and
3. benefit from ‘quoted eurobond exemption’
-> UK issuers can pay interest-free of withholding tax
