Corporate Bond Issuance in Euroclear
International Securities Services
Philippe Laurensy, Euroclear
Euroclear Collateral Conference
May 2014
Agenda
Corporate Bond Issuance Evolution
Euroclear as Issuer CSD
Issuance overview through Euroclear
2
Corporate Bond Issuance Evolution
3
Financing Options
Raise Equity
Advantages
Disadvantages
•
Bank Financing
Capital Markets
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Flexible borrowing
Well established market
Acknowledged expertise
Predictable cash flow
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Performance driven
profit sharing
No fixed costs
Small cap markets
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Competitive pricing
Corporate governance
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Banks deleveraging
Rates set by lender
Reduced lending
appetite due to
increased capital costs
Syndicated loans less
liquid
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Sophisticated and more
liquid market
Robust Investor base
Predictable cash flow
Tax effectiveness
No influence on
corporate governance
Increased regulation
Limited access for
small/lower rated issuers
4
Growth of International Corporate Bonds
2008-2013
Bond Issuance Globally
100%
90%
3%
9%
8%
9%
Bond Issuance with Euroclear Group
10%
11%
22%
17%
22%
80%
24%
27%
26%
100%
90%
Sovereign
70%
40%
34%
43%
60%
41%
35%
40%
30%
20%
10%
80%
9%
10%
8%
9%
10%
14%
11%
16%
15%
13%
53%
61%
70%
60%
50%
2%
9%
24%
15%
24%
25%
34%
37%
Public financial
institutions
60%
Banks & Financial
institutions
40%
Corporate
50%
58%
48%
43%
30%
20%
10%
0%
76%
13%
24%
18%
18%
2010
2011
28%
34%
2012
2013
0%
2008
2009
2010
2011
2012
2013
2008
2009
Source: Dealogic Nov 2013. Outstanding volumes in EUR equivalent millions
Source:
International debt (Dealogic definition): where the borrower is an off-shore entity or if the security is governed
by the rules of more than one market or when the security is a cross-border instrument
5
Corporate Bond Issuance
Corporate entities will continue to be the main drivers
of economic growth in the medium and long term
What do you need ?
• Lowest possible cost of funding
• Secure funding
• Large scope of instruments
• Low cost to market
6
Corporate Bond Issuance
• Financial markets bring together:
► Issuers
seeking funding to meet their business targets
► Investors
seeking investment returns with well established cash flows
• Business growth results in:
► Expansion
from domestic to international market focus
► Increasing
multi-currency funding needs
► The
search for a broader investor base
• International bond markets facilitate cross border participation and
trading flexibility for market participants, globally
7
Euroclear as Issuer CSD
8
Euroclear Group Today
>900,000
>99%
Transactions settled
per day
AA+
Rating by S&P and
Fitch for the past
10 years
Assets in custody
Securities covered
European domestic
debt coverage
>1 million
>€24 trillion
>2000
>€570 trillion
Transactions settled
>€700
billion
Collateral Highway
transactions daily
Institutional
clients from
90 countries
53
Settlement
currencies
2013 data
9
ST008
Euroclear Around the World…
We serve clients in their own language across all time zones
10
Issuance Overview through Euroclear
11
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Why International Securities ?
Benefits
Corporate issuers
Your investors
• Lowest cost of funding
• Large customer base and direct
• Full asset servicing for coupon
•
•
•
•
access to the buy side
Robust and well accepted
procedures for all asset classes,
including multi-listing, multicurrency, multi-governing laws
Simultaneous offering to worldwide
global investors
Single point of contact / relationship
for the issuer for ease of information
and process flows
•
•
payments, tax certifications, legal
certifications, corporate events, etc
Full asset optimisation to leverage
triparty and banking services
Single point of entry to global range
of trading partners
Internationally recognised asset
protection
Low cost to market
12
Why Euroclear?
We help you move from a local to a worldwide issuance and investor base target
Local
Worldwide
• Limited to local jurisdiction and
• One standard for multi legal
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•
•
•
governing laws
Limited currencies or swaps required
Multiple agents required for
issuance and asset servicing
Limited investor base
•
•
jurisdiction and framework
Raise funds in the currency
of your choice
Single agent point of contact
through lifetime of security
International investor access
13
How to Issue International Securities ?
• Involve Euroclear when discussing your new issues with your
legal counsel and arrangers
• Let us know what is important to you:
► Worldwide distribution
► Multi-currency options
► Business intelligence
We will assist you in finding the optimal structure for your needs
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International Securities
A wide range of financial instruments
Fixed Income (in Nominal):
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Medium Term Notes (MTNs)
(Euro) Bonds
(Euro) Commercial Paper
(Euro) Certificates of Deposit
Notes
Convertible
Collateralised Debt Obligations
Collateralised Mortgage Obligations
Asset Backed Securities
Mortgage Backed Securities
Global Depositaries Notes
Reverse Convertible Bonds
Equity Linked Notes
Risk Linked Notes
Treasury Bills
Debentures
Extendable Bonds
Sukuks (Islamic Financing)
Issuance regulations we handle
• Sec Reg
• Reg S / 144A
• 144A 3c7
• REG D
15