ICMA updates guide for €14 billion European private placement market

By Susanna Moon

Chicago, Oct. 25 – International Capital Market Association said that corporate private placements in the European market had doubled in size over the course of about a year to €14 billion by the end of 2015.

Amid the growth, the ICMA has published a report to support the development of the European corporate private placement (ECPP) market, which defines best practices and provides standard summary terms.

The guide is intended to provide a framework of best practices for ECPP transactions, according to an announcement.

The original guide came from the Charter for Euro Private Placements, which was developed by the Euro PP Working Group and published in March 2014. The guide is available at euro-privateplacement.com.

The report said “it is important to note that an ECPP is not” the following:

• A widely offered and syndicated public bond issue such as a “wholesale” or “retail” eurobond, issued on a standalone basis or off a debt issue program, euro medium-term note program or other program for the issue of negotiable debt instruments.

The “wholesale” eurobond market involves very large volumes, with an active secondary market, compared with the European debt private placement market, as a result of large issues (often above €300 million) of high denomination securities syndicated among a number of intermediaries and allocated to very large number of institutional investors.

The “retail” eurobond market involves issues of low denomination debt securities, which may be offered to retail investors as well as to institutional investors. Eurobond issues are generally rated by a rating agency;

• An issue in the form of a private placement under a debt issue program; or

• A loan from a bank or syndicate, where the bank or syndicate may be seeking ancillary business from the borrower.

The guide builds on existing practices in the bond and bank loan markets, as well as those in other international private placement markets, the release noted.

The guide was first published in 2015, and a new edition was added in October “as a result of evolutions in the ECPP market, and now also covers aspects of the German Schuldscheindarlehen market as part of the wider ECPP universe, and includes an appendix on general principles of, and best practice applicable to, ECPP deal amendments and waivers.”

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