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.