Debt Capital Markets – Bond Issue

Corporate Bonds are an effective source of debt financing for medium and large companies

What is it?

A bond issue is a standardized debt instrument issued by a corporation, municipality, bank, government or another issuer and sold to investors. Corporate bonds are an efficient source of funding for medium and large corporates. Banks may issue Mortgage Bonds secured by a pool of mortgage-backed loans.

The instrument allows different redemption schemes (amortizing or bullet), could be callable, puttable, or convertible in an underlying equity instrument (subject to other product type).

Collateral is an option but not a must.

Advantages

  • Option to extend the debt maturity profile

  • Diversification of the investor base with institutional and individual investors

  • Instrument for refinancing, growth financing, investment financing or acquisition financing

Whom is it suitable for?

Companies from all sectors, municipalities, banks, including banks with strong mortgage loan portfolio not used as collateral on another mortgage bonds.

The issuer should be a joint stock company with at least 2 years of corporate history (since the Company’s entry in the Trade Register) and two annual financial statements approved by the General Meeting of the Shareholders. 

Frequently Asked Questions

Yes – the Issuer shall be a joint stock company and should have at least two annual financial statements approved by the General Meeting of the Shareholders of the company. In addition the decision for the issuance of the bonds shall be approved by the General Meeting of the Shareholders.

Risk diversification – the credit limits of the investors remain partially available; long-term financing – up to 10 years; fixed or floating interest rate (coupon); larger volumes – more than one investor.

This is subject to a separate discussion and internal approvals.

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