Hybrid Issuance Regimes for Corporate Bonds in Emerging Market Countries : Analysis, Impact and Policy Choices
Securities regulators in many developing countries are looking for ways to help grow their nongovernment bond markets to finance development. A common challenge is onerous regulations for issuance of bonds, which tend to discourage companies from c...
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24738083/hybrid-issuance-regimes-corporate-bonds-emerging-market-countries-analysis-impact-policy-choices http://hdl.handle.net/10986/22232 |
| Summary: | Securities regulators in many developing
countries are looking for ways to help grow their
nongovernment bond markets to finance development. A common
challenge is onerous regulations for issuance of bonds,
which tend to discourage companies from coming to market.
This paper explains and analyzes an issuance framework—a
hybrid offer regime (HBOR)—that is particularly suitable for
bonds and could help encourage greater issuance and market
growth. The HBOR reduces issuance requirements and approval
times for bond issuers but maintains certain protections to
ensure investor comfort. While certain aspects of this type
of issuance have been covered in literature on private
placements, the review of hybrid offer regimes, as discussed
in this paper, is new and has been evaluated by the WBG.
Drawing on the experience of eight countries, the paper
identifies key features of HBORs and highlights important
issues for policymakers to consider in their implementation.
The findings conclude that the most salient features of
HBORs are: i) investment limited to qualified investors,
usually institutional and/or high net worth; ii) reduced
initial and ongoing disclosures, including exemption from a
full prospectus; iii) limited role of the regulator, if any,
in the approval process; iv) unrestricted access to
secondary market trading for eligible investors; and v)
continued provision of antifraud protections against
false/misleading statements in disclosures. The paper also
looks at issuance trends in three countries and finds that
the HBOR may have had a positive impact on encouraging new,
less established issuers to come to the bond market. |
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