Strasbourg Offers Partial Backing to Prospectus Directive Reforms

Members of the European Parliament have agreed to back the partial adoption of 21 amendments to the legal text of the new Prospectus Directive. According to the final text, issuers of more than 90 per cent of all bonds will have the right to determine where to file their prospectus, as they do today, and that debt issuance programmes – or Medium Term Notes (MTNs) – will continue to operate. While welcoming these improvements, the International Primary Market Association (IPMA) claimed that the industry still has some substantive concerns about the final outcome and the categorization of convertible bonds as equity; the lack of harmonization in the definition of ‘qualified investor’; and the high translation costs for cross-border issues. Some securitized derivatives under offering programmes will have to be discontinued to the detriment of investor choice, said IPMA. Furthermore, said IPMA, issuers will be exposed to an approval process that is not sufficiently transparent or predictable. These problems, if not rectified, could undermine the integration of the market and push issuers away from the European markets, according to the association.


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