Corporate Bond Process

If you wish to proceed with the Bond, we would request a summary report and proposal. This will be presented to the board for approval. Upon approval, you will have a call with the attorneys to discuss the matter further. 

Timeline

Drafting and issuance may take up to 10 weeks, particularly where a third-party opinion is required

Professional & Listing Fees

* No Upfront Broker Fee

* Client will meet lawyers for due diligence before any formal offerings 

• Mandated legal counsel: USD 45,000

• ESG third-party opinion (if required): USD 40,000

• Listing fees: USD 20,000

Please note: The mandated legal fees of $45,000 have to be paid 50% on instruction to the lawyers to act and the balance in stage release whilst the lawyers are working with the client to create the bond for listing. The listing fees are payable to the listing agency such as Bloomberg. There is a fee payable to the lawyer to prepare the investment document to be listed on Bloomberg etc. 

Investment Sourcing

• 2% fee applies where investment capital is sourced via a broker clearing house

• Where investors engage directly with the client, only legal fees apply

Our Fees

Our office fee ranges between 2% and 3%, subject to the parties and structure involved.

1. The name and registration number of the entity that will be issuing the corporate bond;

2. The full name and designation of the company representative, representing the company and signing of their mandate;

3. The physical address of the company;

4. The face value (monetary size) of the bond that the company will be issuing.

Stage Two: For the execution of the mandate, the attorney will require the following:

5. It is ideal if the client can provide a “pitch deck” which will be used to kick off discussions and questions; Inside the pitch deck or executive summary, the attorney would like to establish:

5.1 Does the company have a track record in the industry? Is there a proof of concept?

5.2 What is the extent to which they will be able to provide collateral?

5.3 Is it clear that the company has the requisite experience and expertise?

5.4 Have all compliance issues already been addressed? In the case of a bond for property, we will look at whether the site(s) have been identified, as well as the requirements for - an environmental impact study, rezoning, subdivision, planning permissions, building plan approvals etc. These are all issues which may potentially delay the commencement of a project.

5.5 What is the market analysis for the product? Are there off-take agreements or letters of interest?

5.6 We scrutinise the financials for the project. What are the bond funds going to be spent on? How long will it take to create a revenue stream? How many revenue streams are envisaged? Will the revenue streams be able to service the interest and return the capital upon the maturity of the bond?

The attorney will provide the client with their Business Plan or Executive Summary Headers immediately upon the signature of their mandate, which will assist them in collating and presenting the necessary information.

In the introduction to the client, it is useful if the issuer has had sight of the questions above. The aforegoing is not an exhaustive list, but these questions may serve as a very useful point of start. The main initial objective is to quickly establish whether the project is viable for the bond market. 

For example, if it is established that there are too many compliance issues which are outstanding, it might be that the client will first have to address these before embarking upon the process of drafting and issuing a bond. In our experience, however, eight out of ten clients are ready for the bond market.

 The first step is for the client to sign the attorney’s mandate and Power of Attorney, authorising the attorney to commence the drafting of the Bond. Once they have a signed mandate and they have received 50% of the fee the process commences:

 The attorney conducts due diligence on the client as part of their KYC / AML protocols.

 The attorney will provide the client with their comprehensive Business Plan Headers

document, which will assist the client in realigning their current Business Plan/Executive Summary with the Bond market.

The duration of this phase is largely in the client’s hands. During this phase, the client is required to align their Executive Summary (Business Plan) with the Bond market under the attorney's guidance.

The attorney will analyse the Executive Summary generated by the client and will give feedback on how it may be improved. It is vital that the culmination of both the financial and substantive (technical) elements of the Executive Summary is both defendable and marketable.

*It is important to note that the phase described above is predominantly in the hands of the client, due to the fact that the client’s technical and financial personnel are required to provide comprehensive information for the completion of the project’s Executive Summary. For the purpose of this step-by-step guide, 4 weeks have been allocated for a client to complete their Executive Summary. In practice, clients have taken anywhere between 2 weeks and 4 months to complete their Executive Summary, depending on how close they were to readiness at the inception of this process.

 The drafting of the Trust Indenture and the Use of Proceeds/Listing Particulars is commenced (these documents comprise the official Corporate Bond documentation).

 The client’s Executive Summary is incorporated into the Listing Particulars.

 Establishing, coordinating, drafting, and settling the full pack of official Corporate Bond documentation.

 Analysis of the financial component of the Use of Proceeds by the attorney’s Forensic Accountant. This generally entails many exchanges between our Accountant and the client’s financial team.

 Application for the LEI code (Legal Entity Identifier).

 Application for the ISIN number (International Securities Identification Number).

 After approximately 8 to 10 weeks, the client can expect to have a Corporate Bond which is ready for market, subject to the qualifier above*. The Bond can be taken to market through distribution to networks and broker-agents, and by listing the Bond on stock exchanges and/or electronic platforms. The attorney offers assistance with listing or placement of Bonds on stock exchanges and electronic platforms.

Provided that there are no amendments required to be made to the Bond documents, the Bond drafting process is completed at this point (after approximately 8 to 10 weeks), and the Bond may be taken to market.

The process, however, continues in parallel in the case of Sustainable Bonds.

In the case of Sustainable Bonds

Please note that the marketing of the Bond may commence immediately after the drafting process described above, even though the ESG (Environmental, Social and Governance criteria) verification is still required.

If a Bond is eligible for ESG verification, the attorney offers the service of drafting and providing a Sustainable Bond Framework, which takes approximately 2 weeks. The cost of the Framework is quoted separately from the attorney’s Bond drafting fee.

The completed Corporate Bond documentation and the Sustainable Bond Framework are allocated

to an independent international verifier to draft the Second Party Opinion. This process takes

approximately 6 to 8 weeks, depending upon the complexity of the Bond. The cost of obtaining the

SPO is separate from the cost of drafting the Bond. This cost is due directly to the third-party verifier.

The final stage of the ESG process is optional, depending solely on the client’s requirements. ClimateBond Initiative or “CBI certification” is the apex of ESG certification, which certifies that a Bond or entity meets its specific, science-based Climate Bonds Standard. The cost of this process is due directly to CBI and is not included in the attorney drafting cost. The attorney’s mandate contains all of the terms and conditions of their engagement with the client for the purpose of draft in the corporate bond.