29 March 2005 – LAWFUEL – The Law News Network – Linklaters has advised on the first Eurobond listing on the Swiss Stock Exchange (SWX), Homburger provided legal advice in Zurich and acted as listing agent. The US$125 million Eurobond issued by Banco Itau was jointly led by ABN AMRO Bank and Itau Bank. It is a three year deal maturing in 2008. The bonds issue price was 99.6 per cent and Banco Itau will pay interest at a rate of 4.3 per cent per annum.
Banco Itau becomes the first issuer to list Eurobonds under the SWX’s new Eurobond regime that was introduced on 1 February 2005. Many potential Eurobond issuers are seeking listing alternatives, as the introduction of the EU Prospectus and Transparency Directives will make it significantly more onerous for issuers of debt securities to gain and maintain a listing on the EU’s regulated markets.
The Prospectus Directive comes into force across the EU on 1 July 2005 and will impose increased disclosure obligations on most debt issuers; while the Transparency Directive, due to come into force in January 2007, will require issuers to publish detailed ongoing financial information and management reports during the lifetime of any bonds listed in the EU.
Stock Exchanges in the EU, particularly in London, Luxembourg and Ireland, have traditionally been very attractive to international issuers seeking a listing for debt securities. The increased disclosure and continuing obligations, liabilities and costs that will result from these new EU measures is causing issuers, in particular those from outside the EU, to consider listing debt securities outside the EU or on proposed new “Exchange regulated” markets in the EU.
David Fenwick, managing partner in Linklaters, Brazil commented:
“It is fitting that Banco Itaú, well recognised as one of Latin America’s leading financial institutions and most innovative issuers of capital markets products, is the first to list under the SWX’s new Eurobon d regime. It has been a pleasure working with both the issuer and SWX to achieve this milestone. The choice of SWX listing reflects a desire by Banco Itaú to avoid onerous additional requirements under the new EU directives that are inconsistent with the regulatory regimes to which the bank already submits itself. Banco Itaú will no doubt continue to provide investors with the same high quality and level of continuing disclosure to which they have become accustomed.”
Nick Eastwell, global head of capital markets, Linklaters commented:
” We are delighted to be involved both with Banco Itau and the SWX in this ground-breaking issue. What is becoming increasingly clear is that non EU issuers of wholesale debt securities do not want to submit to the new EU disclosure and continuing obligations regime and will look elsewhere for alternatives. A number of Stock Exchanges are coming forward with solutions.
The SWX has reacted swiftly to the opportunity created and is likely to benefit from being the first Stock Exchange in Europe to offer a viable alternative listing regime and will, no doubt, seek to establish a track record quickly, so as to be able to hold on to that first mover advantage.
Linklaters has always been at the forefront of the development of the international capital markets and we are very pleased to be taking a lead in developing practical solutions to what must be seen as an own goal by the EU. At a time when, in the aftermath of the draconian obligations imposed by the Sarbanes-Oxley Act in the US, non US issuers have been looking to avoid registering with the SEC, the EU has, in my view ,wasted an opportunity to attract such issuers to the EU’s regulated markets.”
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