Corporate bond meaning

In this issue: Sustainable finance and ESG weekly round-up Economic Crime and Corporate Transparency Act 2023 Lending Acquisition finance Shipping finance Real estate finance Sustainable finance Debt capital markets Derivatives Regulation for banking lawyers Sanctions Daily and weekly news alerts New and updated content Useful information Sustainable finance and ESG weekly round-up For a summary of this week’s Sustainable finance and ESG developments, see Sustainable finance and ESG weekly round-up—14 November 2024. Economic Crime and Corporate Transparency Act 2023 Economic Crime and Corporate Transparency Act 2023 (Commencement No 3) Regulations 2024 (SI 2024/1108): Provisions in ECCTA 2023 on civil recovery of cryptoassets in Scotland took effect on 7 November 2024, and measures introducing the UK-wide offence of failure to prevent fraud will commence on 1 September 2025. See: LNB News 07/11/2024 12. Unique Identifiers (Application of Company Law) Regulations 2024 (SI 2024/Draft): These draft Regulations would widen...

In this issue: UK, EU and international regulators and bodies Acountability, culture and social governance Authorisation, approval and supervision Prudential requirements Financial crime and sanctions Investigations, enforcement and discipline Dispute resolution for financial services lawyers Banks and mutuals EU MiFID II Consumer credit, mortgage and home finance Regulation of insurance FSMA regulated pensions activity Payment services and systems Financial Services Enforcement Database Daily and weekly news alerts Intraday news alerts New and updated content Dates for your diary UK, EU and international regulators and bodies Regulation to prioritise UK growth over risk-aversion in 2025 Law360, London: Financial watchdogs have vowed, firmly in line with new government objectives, to elevate economic growth above risk-aversion in 2025 — a recalibration that might cut across the recent stress on safeguarding consumers. See: Regulation to prioritise UK growth over risk-aversion in 2025. Acountability, culture and social governance UK...

EU developments EFAMA flags that ESMA's new Fund Naming Guidelines limit EU sustainable investment The European Fund and Asset Management Association (EFAMA) has cautioned that the European Securities and Markets Authority’s (ESMA) proposed Fund Naming Guidelines are not compliant and conflict with existing sustainable finance frameworks, such as the EU Green Bond Standard. EFAMA indicates that this misalignment could narrow the investable universe for green bond funds and, in consequence, impede the expansion of the EU corporate green bond market. See: LNB News 08/10/2024 42. Source: Fund naming guidelines put growth of corporate green bond sector at risk. Council of the EU approves climate conclusions ahead of COP 29 meeting The Council of the EU has endorsed conclusions on climate finance in advance of the United Nations Framework Convention on Climate Change (UNFCCC) session in Baku, Azerbaijan, running from 11 to 22 November 2024 (COP 29). The conclusions stress that the EU and its Member States remain committed to the existing target for developed nations to...

Shari’a-compliant financing arrangements Shari’a‑compliant financing arrangements, otherwise described as Islamic financing arrangements, can be structured in a number of ways. To cater for the direct tax analysis of Shari’a financing variants, the UK has put in place specific provisions known as the alternative finance arrangement rules. The purpose of these UK rules is to ensure that, for direct tax purposes, a qualifying Shari’a‑compliant financing is taxed in the same manner as an equivalent conventional financing arrangement. Achieving that parity depends upon the arrangements meeting the relevant statutory conditions prescribed for alternative finance arrangements in the applicable legislation. Currently, the regime extends to five distinct categories of financing arrangement. Importantly, the direct tax framework for alternative finance is not limited solely to Islamic financing; non‑Shari’a structures can, in principle, be brought within its scope as well. Among the five categories is the investment bond arrangement, commonly known as an alternative finance investment bond, or AFIB. This Practice Note deals with AFIB arrangements. Sukuk, which are a type of Shari’a financing...

This Practice Note outlines guidance on identifying and engaging with bondholders in the context of a restructuring. For broader background on debt securities, see the following Practice Notes: Key features of the debt capital markets Bonds and notes Issuing debt securities—key documentation Parties in an issue of debt securities For materials focused on restructuring where debt securities are involved, refer to these Practice Notes: Guide to representing bondholders in a restructuring Liability management of bonds Enforcement of debt securities Why keep in touch with bondholders? Traditionally, issuers of bonds have not maintained regular dialogue with their bondholders, with communications largely confined to moments when action was required from debt holders, most often linked to a corporate action. Such contact commonly took the form of a notice released or circulated by the issuer, frequently via a bond trustee. The trustee is a financial institution vested with trust powers—for example, a commercial bank or...

Investors in high yield paper are now exerting a far greater influence on restructurings. Historically, despite high yield instruments appearing in a number of sizeable European corporate capital stacks, talks around restructurings were largely led by senior banks and other syndicated lending groups. The key reason was that high yield notes were frequently unsecured, offering minimal, if any, return on a winding-up, in contrast to leveraged loans, which are commonly secured. As a result, high yield holders generally wielded little sway over restructuring discussions. Strategy and types of holders Following the 2008 global financial crisis, leveraged finance has shifted towards greater use of high yield bonds, in part due to tighter leveraged lending rules and guidelines for loans. Alongside buoyant M&A propelling market expansion, European issuers have often tapped the high yield market to replace senior, mezzanine and second-lien leveraged loans, opting to refinance through notes rather than loans. These refinancings frequently meant the new high yield issuance shared security and guarantee packages comparable to the loans they...