Competence centre for SME bond issues

For various reasons (including the third Basel accord), at the present time it is not possible for many German medium-sized companies to extend their credit exposure to banks which means that their financing plans are endangered. Furthermore, numerous companies want to or are even forced to reduce their credit volume. In that context mid-cap bonds can be an attractive alternative or complementary measure. In recent years many companies have already successfully implemented bonds and more will follow. On the investment side private and institutional investors, due to the low interest policy of the central banks and lack of alternative investment possibilities in the area of fixed interest currently see mid-cap bonds as an attractive form of investment and therefore this form of investment has made a contribution to establishing the bond as a financing instrument for German medium-sized companies. The market for mid-cap bonds is still a relatively new market. In the coming years this market will continue to grow and develop.

 

The issuers of bonds are very different and there are many different reasons why bonds are issued. The capital raised is used, for example, by the issuer for the financing of investments for the provision of services, for the financing of growth and internationalisation strategies or for financing projects. But a bond may also be issued for the purpose of refinancing other external capital items (in particular bank loans), which in turn reduces exposure to the banks. In practice it has been observed that in general the funds are used for a combination of growth financing and refinancing.

 

For the placement of the bond differentiation is made between a private placement with a limited circle of institutional or semi-institutional investors or a public placement usually via specially set-up market segments for the medium-sized companies such as the "Bondm" from the Stuttgart stock exchange, the "Entry standard" of the German stock exchange or the "Mid-sized market" of the Düsseldorf stock exchange. On the other hand, differentiation is made between own issues and third-party issues. With own issues the issuer manages the distribution and banks only provide service functions (including a paying agent). With third-party issues the banks, placement consortia or other capital brokers manage the distribution for a fee.

 

On the way to the successful placement of the bond, the complexity of different bond projects can result in diverse requirements for the company. Rödl & Partner is able to offer companies comprehensive consulting services during the whole process and offers a one-stop shop for the most important consulting services. We also maintain regular contact with other service providers, such as rating or communication agencies. If required, we can handle the complete management for the issue of the bonds.