Corporate Bond Issuance in EuroclearInternational Securities Services
Philippe Laurensy, EuroclearEuroclear Collateral ConferenceMay 2014
2
Agenda
Corporate Bond Issuance Evolution
Euroclear as Issuer CSD
Issuance overview through Euroclear
Financing Options
Advantages
Disadvantages
Raise Equity
• Performance driven profit sharing
• No fixed costs• Small cap markets
• Competitive pricing• Corporate governance
Bank Financing
• Flexible borrowing• Well established market • Acknowledged expertise• Predictable cash flow
• Banks deleveraging • Rates set by lender• Reduced lending
appetite due to increased capital costs
• Syndicated loans less liquid
Capital Markets
• Sophisticated and more liquid market
• Robust Investor base• Predictable cash flow• Tax effectiveness• No influence on
corporate governance
• Increased regulation• Limited access for
small/lower rated issuers
4
5
Growth of International Corporate Bonds2008-2013
Source:Source: Dealogic Nov 2013. Outstanding volumes in EUR equivalent millions
International debt (Dealogic definition): where the borrower is an off-shore entity or if the security is governed by the rules of more than one market or when the security is a cross-border instrument
Bond Issuance Globally Bond Issuance with Euroclear Group
13%24% 18% 18%
28% 34%
76% 53% 61% 58%48% 43%
9%
14% 11% 16% 15% 13%
2% 9% 10% 8% 9% 10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013
15%24% 24% 25%
34% 37%
60% 43% 41% 40%34% 35%
22%24% 27% 26% 22% 17%
3% 9% 8% 9% 10% 11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013
Sovereign
Public financialinstitutions
Banks & Financialinstitutions
Corporate
Corporate Bond IssuanceCorporate entities will continue to be the main drivers of economic growth in the medium and long term
What do you need ?
• Lowest possible cost of funding
• Secure funding
• Large scope of instruments
• Low cost to market
6
Corporate Bond Issuance
• Financial markets bring together:► Issuers seeking funding to meet their business targets► Investors seeking investment returns with well established cash flows
• Business growth results in:►Expansion from domestic to international market focus► Increasing multi-currency funding needs►The search for a broader investor base
• International bond markets facilitate cross border participation and trading flexibility for market participants, globally
7
ST008
>99%European domestic
debt coverage
2013 data
Euroclear Group Today
>900,000Securities covered
>€24 trillionAssets in custody
53Settlementcurrencies
>€700 billion
Collateral Highwaytransactions daily
>2000Institutional clients from 90 countries
AA+Rating by S&P andFitch for the past
10 years
>1 millionTransactions settled
per day
>€570 trillionTransactions settled
9
Why International Securities ?Benefits
12
Corporate issuers Your investors
• Lowest cost of funding • Large customer base and direct
access to the buy side• Robust and well accepted
procedures for all asset classes, including multi-listing, multi-currency, multi-governing laws
• Simultaneous offering to worldwide global investors
• Single point of contact / relationshipfor the issuer for ease of information and process flows
• Full asset servicing for coupon payments, tax certifications, legal certifications, corporate events, etc
• Full asset optimisation to leverage triparty and banking services
• Single point of entry to global range of trading partners
• Internationally recognised asset protection
Low cost to market
Local Worldwide
• Limited to local jurisdiction and governing laws
• Limited currencies or swaps required• Multiple agents required for
issuance and asset servicing • Limited investor base
• One standard for multi legal jurisdiction and framework
• Raise funds in the currency of your choice
• Single agent point of contact through lifetime of security
• International investor access
Why Euroclear?
13
We help you move from a local to a worldwide issuance and investor base target
How to Issue International Securities ?
• Involve Euroclear when discussing your new issues with your legal counsel and arrangers
• Let us know what is important to you:►Worldwide distribution►Multi-currency options►Business intelligence
14
We will assist you in finding the optimal structure for your needs
Issuance regulations we handle
• Sec Reg• Reg S / 144A • 144A 3c7• REG D
International SecuritiesA wide range of financial instruments
Fixed Income (in Nominal):• Medium Term Notes (MTNs)• (Euro) Bonds• (Euro) Commercial Paper• (Euro) Certificates of Deposit• Notes• Convertible• Collateralised Debt Obligations • Collateralised Mortgage Obligations• Asset Backed Securities• Mortgage Backed Securities• Global Depositaries Notes• Reverse Convertible Bonds• Equity Linked Notes• Risk Linked Notes• Treasury Bills• Debentures• Extendable Bonds• Sukuks (Islamic Financing)
15