Most Read Contributor in Hong Kong, September 2016
The global financial crisis was without doubt a watershed,
impacting companies and investors alike and bringing with it
sweeping changes to the regulation of banks. Among the many subtle
changes in market dynamics brought about by the crisis are those
seen in the debt capital markets in Asia.
Companies that had traditionally relied on bank financing
experienced directly the liquidity constraints brought about by the
credit crunch in 2008. As a result, many such companies became more
willing to look to various other sources of financing available in
the markets. This development has benefited the region's debt
capital markets, which experienced a boost from a new breed of
issuers – and once these issuers have entered the debt
capital markets and established a set of issuing documents, they
seldom look back.
The global financial crisis has also impacted investors'
perception of risk. Many investors have scaled back their
aspirations for the return on their investments and opted to
decrease their exposure to the equity capital markets and increase
the proportion of their investment portfolio allocated to the debt
capital markets. These additional investors in the debt capital
markets create demand and enable issuers to price their issues at
favourable rates and tenors relative to bank financing.
From a regulatory perspective, banks have been subject to
sweeping regulatory developments, including changes in the amount
of capital required to be set aside for loans made and the
measurement of the risk associated with those loans. Consequently,
many banks have scaled back their lending, increased the pricing or
the amount of security they require, or become more selective in
terms of companies or industries.
It is against this backdrop that we feel it is useful to
distribute this publication, to provide companies that have not yet
had a flavour of the workings of the debt capital markets with a
very brief introduction. For more seasoned market participants, we
hope this publication serves as a convenient reference.
Mayer Brown is a global legal services organization
comprising legal practices that are separate entities (the Mayer
Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a
limited liability partnership established in the United States;
Mayer Brown International LLP, a limited liability partnership
incorporated in England and Wales; Mayer Brown JSM, a Hong Kong
partnership, and its associated entities in Asia; and Tauil &
Chequer Advogados, a Brazilian law partnership with which Mayer
Brown is associated. "Mayer Brown" and the Mayer Brown
logo are the trademarks of the Mayer Brown Practices in their
This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
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On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
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