Negative Interest Rates: Autorité Des Marchés Financiers Takes Position On Information To Be Included In Bond Prospectuses

Author:Mr Matthieu Duplat, Karsten Müller-Eising, Giles P. Elliott, Vica Irani, Drew Salvest, Florent Bouyer, Linda A. Hesse and Robert F. Mayo
Profession:Jones Day

During the last decade, negative interest rates have raised concerns in the European debt capital markets landscape. Prospectuses often allow the issuance of debt securities for which the interest rate is linked to indexes that are or can become negative (e.g. LIBOR, EURIBOR).

In response to this phenomenon, the Autorité des marchés financiers ("AMF") published on 27 June 2017 guidelines on the information that should be disclosed to investors in prospectuses allowing for the issuance of floating-rate bonds, by distinguishing three situations:

Where a prospectus formally excludes the application of a negative interest rate by providing for a zero floor rate, no particular information is required; Where a prospectus expressly provides for a negative interest rate or the possibility of such a rate, the AMF requires the insertion of implementing instructions including the method of calculation and charging of the negative interest and the insertion of a corresponding risk factor; and Where a...

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