Eurobonds issuers

As noted, the coupon rate is the interest rate the issuer agrees to pay each year. The coupon rate is used to determine the annual coupon payment which can be delivered to the bondholder once per year or in two or more equal installments. As noted, for bonds issued in European bond markets and the Eurobond markets, coupon payments are made annually. Conversely, in the United Kingdom, United States, and Japan, the usual practice is for the issuer to pay the coupon in two semiannual installments. An important exception is structured products (e.g., asset-backed securities) which often deliver cash flows more frequently (e.g., quarterly, monthly). 

The date used as the point for calculation is the settlement date for the bond, the date on which a bond will change hands after it is traded. For a new issue of bonds the settlement date is the day when the bond stock is delivered to investors and payment is received by the bond issuer. The settlement date for a bond traded in the secondary market is the day that the buyer transfers payment to the seller of the bond and when the seller transfers the bond to the buyer. Different markets will have different settlement conventions for example, UK gilts normally settle one business day after the trade date (the notation used in bond markets is T+ 1) whereas Eurobonds settle on T + 3. The term value date is sometimes used in place of settlement date, however the two terms are not strictly synonymous. A settlement date can only fall on a business date, so that a gilt traded on a Friday will settle on a Monday. However a value date can sometimes fall on a nonbusiness day. 

However, the economic rationale for its continned expansion remains intact. It might take longer than some of the original optimistic pundits predicted. But over time, the Eurobond market will develop the depth and liquidity to match the needs of both investors and issuers. 

For market practitioners, in the pre-EMU, era the term Eurobond meant a type of security rather than the currency of the obligation. Eurobonds could be sold in any convertible currency, by issuers domiciled in any country. A Eurobond had—and still has—the following features ... 

Since the establishment of European Monetary Union on 1 January 1999, the word Eurobond has taken on an additional meaning— that of a euro-denominated security. In this chapter we generally use Eurobond both for issues that are in Eurobond format, and that are euro-denominated. There are, of course, markets for noneuro denominated corporate issues, chiefly in dollars and sterling. Noncorporate borrowers, such as sovereigns, supranationals, and agencies, are also big issuers of Eurobonds in all the major currencies. 

Eurobond documentation for investment-grade issues is reasonably standardized, although the wording of some terms and conditions has varied over time. We list the key terms and conditions below. (Sterling issuers offer additional protection in some instances, as discussed separately.)... 

The sterling-denominated Eurobond market has an active long-dated (30 years or more) sector, and this has led to two important differences in documentation compared to the Euro market. Firstly, to provide additional comfort to investors in long maturity paper, the bonds are often secured by charges on the issuers assets. It is worth noting in this connection that the common terminology can be inconsistent. Market... 

Top quality issuers have long been a part of Eurobond scene. But in euros, they have been eclipsed by the growth of the corporate market. Sovereign issuance in particular has fallen, as countries have shifted activity back to their domestic issuance mechanisms. This has mainly been done to increase liquidity and size in domestic market format, so as to compete better within the Eurozone. 

Issuers of sterling bonds including Eurobonds and bulldogs. 

The role of the trustee in a Eurobond issuance is to serve as a bridge between the issuer of the bonds and the bondholders throughout the life of the issuance. The scope of duties undertaken by a trustee in connection with any given issuance may vary from structure to structure, but the essence of the trustee s role is to hold and exercise as necessary, and as permitted by the trust documentation, the legal rights of each bondholder in the transaction. 

The terms of trusts created in support of Eurobond issuance are negotiated chiefly between representatives of the issuer (usually the... 

The use of a trust structure in a Eurobond issuance can minimise significantly the need to consult bondholders on certain document modifications. The issuer and trustee typically craft the trust deed to empower the trustee to exercise discretion on behalf of all bondholders within specified parameters. Under current market standards, the trustee is normally permitted to agree to nonmaterial modifications of the terms of a Eurobond issuance and exercise very specific powers, such as the power to appoint or approve replacement agents within defined circumstances and criteria, without consultation of the bondholders. The ability of the trustee to agree to nonmaterial term modifications and exercise certain prescribed powers without consultation of bondholders benefits all parties to the deal both practically and economically because expensive and time consuming bondholders meetings are not necessary to deal with such issues. 

Under normal circumstances, the role of the trustee in a Eurobond issuance governed by English law, whether the role is cast as a note trustee, security trustee or both, is largely passive. In most Eurobond transactions, even highly structured transactions, the issuer is left to conduct its... 

The use of trusts and professional trustees within Eurobond issuance serves a number of legal and practical purposes. In the main, however, the essential service the trustee brings to the transaction is stability to the transaction and piece of mind for bondholders and issuers alike. Accordingly, the trustee is an invaluable element of a successful secured Eurobond transaction. Further to the role of trustee the Trust bank will offer a range of services to support the structured finance market place. 

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