Shortcutting the prospectus for issuance in EUR
Operational gains and savings on legal procedures made Danish Ship Finance stay with Danish law and the Danish CSD for its prospectus on ship covered bonds in EUR, even though the company had come far in the process for a UK prospectus.
Ship covered bonds are similar to mortgage bonds, and Danish Ship Finance A/S operates a loan book of approximately USD 6 billion, secured by first-priority mortgages on more than 500 vessels. A team of 70 shipping industry experts in the Copenhagen office are dedicated to providing a reliable source of loan capital for shipowners. Especially Denmark and Germany have a strong tradition for ship covered bonds, which have a zero-default track record, even during the recent shipping crisis. Danish Ship Finance is funded by the issuance of covered bonds on NASDAQ OMX Nordic, and the company is ready to issue in EUR any day now.
“We decided to duplicate our efforts to prepare for issuance in EUR. Well into the process for a UK-based prospectus, we learned that several Danish market participants were issuing bonds in EUR under Danish law, using the same set-up as for DKK. The advantages of this set-up made us change horses halfway through the race,” explains Head of Legal & Compliance Morten Søgaard Sørensen from Danish Ship Finance. The company now has a prospectus ready for the issue of covered bonds in EUR using Danish law, a Danish legal partner, NASDAQ OMX, VP SECURITIES and the in-house expertise already established. Danish Ship Finance is ready to execute the business decision of issuing in EUR for the first time, whenever appropriate.
Danish Ship Finance’s advisers originally recommended issuing under UK law from an international CSD, since the first issuance from a company should be as standardised as possible, especially when it comes to the prospectus. This is “business as usual” when it comes to bond issuance in EUR, yet tangible benefits in terms of costs and operations made the company go with Danish law, and their existing legal counsel and CSD partner. A Danish prospectus may be around 100 pages, while the UK prospectus is 140 pages. Moreover, for a Nordic issuer the UK prospectus contains more terms and terminology than required under Danish legislation, for example.
“Legal advice and legal procedures are approximately half the cost in Denmark, and we expected the same difference in handling changes along the way,” says Morten Søgaard Sørensen from Danish Ship Finance. “This is a very tangible cost reduction, and it’s not associated with reduced reach for the EUR issuance. Instead, we can use exactly the same process as for DKK, just with another ISIN, and we feel very comfortable operating under Danish law in the VP system. We also reduce costs and the time spent by simply re-using all of the current knowledge and operational set-up for issuance in DKK and applying this to EUR bonds.”
Danish Ship Finance has been committed to ship financing since 1961 and is a trusted partner for Danish and international shipping companies. The shipping industry is crucially important to the EU, since shipping is an enabler for international trade and serves as a cornerstone for other industries. In 2015, the shipping industry contributed around 2.1 million jobs and EUR 140 billion of induced GDP to the European economy.
For more information:
Contact Senior Relationship Manager Søren Milbregt or Customers & Relations Director Henrik Ohlsen