Drawing on our expertise and economies of scale, we help government agencies achieve better debt financing and investment outcomes. TCorp provides domestic and international investors with access to bonds and other debt instruments issued on behalf of the state of NSW. TCorp provides funding to NSW government agencies and other eligible clients. TCorp provides NSW government agencies and other eligible clients with investment opportunities across a range of asset classes. TCorp offers a global bond programme that enables international investors to purchase New South Wales government bonds.
Benefits include a wide choice of currencies and maturities, exemption from Australian interest withholding tax and the backing of New South Wales' strong credit ratings. Email Investor Relations. The programme is highly effective in issuing a range of debt securities in many currencies with a broad maturity range. The programme is listed in Singapore and the fiscal agent operates out of London. The programme is used for issuance in multiple currencies in global capital markets. Regions include Japan, the Euro region and Asia.
An appointed panel of dealers carry out issuance in the different markets. The programme provides international investors with short-term investments across a broad range of currencies. Issuance is conducted through an appointed dealer panel.
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To establish an MTN program, issuers file a shelf registration statement with the SEC to permit delayed and continuous registered offerings. They also enter into master legal documents governing the program, including agreements with one or more banks to act as selling agents or dealers under the program. The master documents provide for flexibility to issue a wide variety of debt securities with different terms.
What Are Bonds?
Once an MTN program has been established initially, issuers can complete offerings with minimal new documentation, usually limited to a prospectus supplement indicating the issue price, interest rate, amount, maturity, and other terms specific to the offering. This significantly reduces the amount of time and expense required to launch and complete a new offering and enables issuers to react more quickly to favorable market conditions.
Most MTNs have a maturity of two to five years, though there is no legal requirement that the notes have medium terms, and it is not uncommon for issuers to issue short or long-term notes under MTN programs. MTNs usually carry an investment grade rating. A convertible bond is a hybrid debt security that provides the holder, and sometimes the company, with the option to convert the debt security into another security of the issuer— typically common equity shares—after a fixed date or upon certain conditions being met at a specified conversion price.
Until converted, a convertible bond behaves like a typical debt security. Convertible bonds usually include anti-dilution provisions, pursuant to which the conversion price is automatically adjusted in order to preserve the value of the conversion option in the event of new equity issuances, stock splits, mergers, or other transactions affecting the equity of the issuer. Technology and biotechnology companies are frequent convertible bond issuers.
In addition, many convertible bonds issued in recent years can only be called by the issuer if certain market price conditions are satisfied, which can create difficulties in structuring a sale or merger involving the issuer. Commercial paper is a short-term, unsecured debt instrument used by large highly rated investment grade issuers.
Commercial paper has a maturity ranging from two days to days, with most maturing between five and 45 days. At maturity, issuers typically either pay the commercial paper from cash on hand or roll the paper by issuing new commercial paper and using the proceeds to repay the paper that has come due. Due to its short maturity, commercial paper is only a viable financing tool for highly creditworthy companies that are confident of being able to sell commercial paper at attractive rates on a continuous basis. These qualities make commercial paper an attractive and relatively low-risk investment for certain institutional investors, such as money market mutual funds, and as a result commercial paper tends to be less expensive than other forms of debt financing, such as a bank credit facility.
These investors typically hold commercial paper for its entire term. Commercial paper is almost always issued on an unregistered basis pursuant to an exemption from registration. The most commonly relied upon exemptions are Sections 3 a 3 and 4 a 2 of the Securities Act. Section 3 a 3 of the Securities Act provides an exemption from registration for debt securities with a maturity of nine months or less, the proceeds of which are used to finance current transactions. Issuers must take steps to ensure that the proceeds from commercial paper sold under this exemption are only used to finance working capital and other current transactions, such as paying operating expenses.
SEC guidance has established other requirements for commercial paper issued pursuant to this exemption, including that the paper must be of prime quality and may not be of type ordinarily purchased by the public. In addition, the commercial paper must be eligible for discounting by the Federal Reserve Banks. Companies typically issue commercial paper through one or more banks referred to as dealers.
Similar to the role of an underwriter in a registered securities transaction, dealers purchase the commercial paper from issuers and immediately resell it to investors. The issuer also typically appoints a third-party financial institution, usually a trust company or bank, to act as issuing and paying agent, which performs functions similar to those of a trustee under a bond indenture, including processing payments and coordinating clearing and settlement with DTC.
Like MTNs, commercial paper is typically issued on an ongoing basis pursuant to a pre-established program. The documentation for a commercial paper program is typically negotiated by the issuer and the lead dealer and include an offering circular, one or more dealer agreements, and an issuing and paying agent agreement. Given the high credit quality and short maturity of commercial paper, terms are relatively standardized compared to other corporate debt securities and are not heavily negotiated.
Issuances and programs
Ari has particular expertise in leveraged finance, acquisition finance, and strategic credit transactions. Ari regularly acts for clients in connection with arranging committed debt financing. Daniel R. Daniel has broad experience advising both borrowers and lenders in a wide range of financing transactions, including acquisition financings and other strategic credit situations.
For an explanation of the role of underwriters in and the regulations impacting registered securities offerings, see. For an exploration on the special considerations that are applicable to offerings involving convertible bonds, see.
Toggle navigation. Connect with us. Corporate Debt Securities in U. What Is a Debt Security? Key characteristics of debt securities include the following: Principal amount.
The amount the issuer must repay at maturity and on which interest is calculated is the principal amount. The time at which any outstanding amounts still owed under a debt security must be repaid is known as the maturity. The length of the period from the date of issuance of a debt security to its maturity date is sometimes referred to as the term or tenor.
Maturities vary significantly depending on the nature of the offering and the issuer. Notes may either be senior obligations or subordinated obligations. Senior obligations rank equally in right of payment with general unsecured claims against the issuer and ahead of subordinated claims, whereas subordinated debt may not be paid until all senior claims to which the debt has been subordinated have been repaid in full.
Noteholders are typically entitled to be paid interest on the outstanding principal amount of their notes. The interest rate may be a fixed rate or a floating rate based on a benchmark rate. Interest is typically paid in cash at regular intervals during the term of the debt security. In the case of paid-in-kind or PIK notes, the issuer is permitted to pay interest in kind by adding the amount of interest owed to the outstanding principal amount in lieu of a cash payment.
Zero coupon notes are notes that do not pay interest; instead, the notes are issued to investors at a discount to their face amount and then repaid at face value at maturity. Call protection is attractive to debt investors because it helps protect against the risk that the issuer will refinance the bonds at a lower interest rate as soon as business or market conditions improve, in which case investors may be unable to reinvest their capital at the same rate. This is important as most debt securities are fixed rate.
The notes may also include mandatory redemption provisions requiring the issuer to redeem the notes before maturity if certain events occur such as asset sales and change of control. Credit ratings. Often, different securities issued by the same company will have different credit ratings depending on their terms.
Related commercial paper medium term notes
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