The Euronext bond offer: tailor-made financing solutions for all companies
European companies raised €62.3 billion in bonds (including convertible bonds) on Euronext’s European markets in 2013. This success is evidence of investor appetite for corporate credit in an environment of historically low interest rates. It is also based on Euronext’s many innovative offers to support the transformation of traditional financing circuits, with Euronext’s bond offer segmented today to satisfy the needs of companies of all sizes, from the largest to the smallest.
“There are many advantages to a bond offer. Companies can diversify their financing sources and reduce their dependency on bank financing. No dilution for the shareholder, historically low rates, long maturity, no or few covenants... issuers have much to gain from turning to the bond market. At the same time, these offers also enable investors to benefit from all the advantages of a regulated or self regulated market: liquidity, transparency, security, efficiency and credibility”, says Marc Lefèvre, Director, Head of Business Development & Client Coverage Europe, Euronext.
Large companies thus have access to a broad range of solutions based on their desired criteria (investor, format, maturity, currency, etc.):
- Eurobonds. These enable the issuer to turn to European institutional investors via syndicated investment in the bond market. Companies must first obtain a credit rating. Euronext’s straightforward, long-term and transparent infrastructure has supported the strong growth of this product in recent years.
- Euro PP. Launched in 2012, euro private placement bonds (Euro PP) allow mid-cap companies to to issue bonds with qualified institutional investors, in particular insurers. Private placement benefits from a specific legal framework and a format tailored to the companies concerned. This long awaited investor tool is also an efficient response to banking disintermediation.
- Retail bond offer. This allows a company to access the institutional and individual investor markets to expand its financing possibilities and increase its visibility with a loyal target group. Ratings are not required for large companies.
SMEs have access to Euro PPs and retail investors (Initial Bond Offering – IBO); this latter offer, launched in 2012, allows listed and non listed companies to turn to institutional and individual investors via a public offer on the regulated (Euronext) or self regulated (Alternext) market using a centralization process similar to that involved in an IPO. Ratings are required for listed SMEs with market capitalization of less than €100 million, and for non-listed companies1.
“Demand from institutional and individual investors is strong for these quality bond products that offer attractive returns and meet today’s prudential standards. Euronext’s expansive bond offer is part of our major effort to redirect investor savings towards productive investment,” says François Houssin, Head of Client Coverage France for Euronext.
1 For non-listed companies which follow the criteria of the European SME definition.