Corporate bonds are becoming increasingly popular

In the terms and condi­ti­ons of its bond issue, the company itself defi­nes the terms and condi­ti­ons and the purpose for which it wishes to raise its finan­cing on the capi­tal market. At present, the bonds mostly have a term of 5 years, bear inte­rest of around 6% — 9% and have a private inves­tor-friendly mini­mum deno­mi­na­tion of € 1,000. The volu­mes vary between approx. € 10 million and € 150 million. A prere­qui­site for an issue is, in parti­cu­lar, that the company provi­des evidence of a rating by an appro­ved agency, publishes a secu­ri­ties pros­pec­tus for its bond and applies for admis­sion to the desi­red stock exch­ange. In addi­tion, for the bene­fit of inves­tor protec­tion, it is subject to certain trans­pa­rency obli­ga­ti­ons that exceed the level custo­mary in over-the-coun­ter trading (publi­ca­tion of annual finan­cial statements/interim reports, quasi-ad hoc publi­city, possi­bly annual follow-up ratings, publi­ca­tion of a finan­cial calendar).

The Mittel­stands­bonds can curr­ently be listed on the Stutt­gart, Frank­furt, Düssel­dorf, Munich and Hamburg/Hanover stock exch­an­ges. For the most part, the various exch­an­ges have compa­ra­ble admis­sion requi­re­ments. In recent months, howe­ver, charac­te­ristic features have emer­ged for indi­vi­dual exch­an­ges, such as the volume of the bond, the issuer’s sector of acti­vity, distri­bu­tion chan­nels and costs. In this respect, the issuer should cont­act a law firm early in the review of its project and seek advice on the various opti­ons available. The lawyer will also prepare the pros­pec­tus in coope­ra­tion with the issuer’s audi­tors and accom­pany the appli­ca­tion for the bond’s admis­sion. In some cases, the stock exch­an­ges require the invol­vement of a finan­cial expert licen­sed by them in each case, who checks the finan­cial “matu­rity” of the company and ensu­res compli­ance with the afore­men­tio­ned disclo­sure requi­re­ments (such as the “coach” for Bondm at the Stutt­gart Stock Exch­ange). Of course, the issuer can also cont­act these finan­cial experts or directly to the desi­red exchange.

The bonds can be placed with the help of the chosen stock exch­ange and through banks, which inform inte­res­ted inves­tors about new invest­ment oppor­tu­ni­ties by means of infor­ma­tion brochu­res, mailings, etc. — With its “subscrip­tion box” EUWAX, the Stutt­gart Stock Exch­ange offers an orga­niza­tion that solely takes care of the marke­ting of the bond (cost approx. 0.75% of the placed volume). Howe­ver, inves­tors who are alre­ady infor­med can also subscribe to the bonds directly from the issuer. Expe­ri­ence shows that a high level of aware­ness of the issuer and an attrac­tive inte­rest rate on the bond attract many inte­res­ted parties; most previous bonds were “sold out” long before the end of the plan­ned subscrip­tion period.