A forum sponsored by the Association of British Insurers and the German Investment and Asset Association (BVI) have published a set of proposals to improve the functioning of the European bond market.
Investors, issuers and intermediaries from all sides of the market and from several different countries came together to agree a series of steps to help improve the way the market currently functions.
Proposals, published jointly by the ABI and BVI, focus on ways of ensuring more timely distribution of prospectus material, along with an education drive to improve understanding of the terms used in bond market documentation, and a possible contribution from credit rating agencies in highlighting key features of bond issues.
The forum was organised in response to the growing debate in the European bond market about the quality of documentation and the risks run by investors from corporate events, such as a change of control, which can affect the value of their holdings.
Other supporters of the forum, and the proposals put forward, include; the Euro Debt Market Association (AMTE), the Association of Corporate Treasurers (ACT), the Dutch Fund and Asset Management Association (DUFAS), the International Capital Market Association (ICMA), the Investment management Association (IMA) and the Assogestioni (Association del Risparmio Gestito).
These organisations plan to help members follow through on the paper’s practical recommendations to improve information flow between issuers and investors and enhance the clarity of the documentation.
Stephen Haddrill, director general of the ABI, says: “This is the first time representatives from all sides of the market have come together. The paper is only a start, but it represents a milestone for the European capital market. “
Meanwhile, Rudolf Siebel, managing director of the BVI, says: “We have a basis from which we can move forward together. We are particularly happy that a number of organisations have already formally expressed support for the conclusions.”
The forum now plans to hold a conference in early summer to develop its ideas further.
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