Spain debt

Snapshot: Regulating High Yield Debt in Spain


Disclosure requirements

Describe the disclosure requirements applicable to high yield debt financings. Is there a particular regulatory body that reviews or approves these disclosure requirements?

The offering memorandum contains detailed information about the issuer, including its business, industry, all guarantees and guarantees, its financial statements and the terms of the notes, to enable investors to make an informed assessment. investments.

Spanish high yield bond issues are normally governed by New York law and admitted to trading on the unregulated markets of Ireland or Luxembourg. Therefore, the law to which the issue is subject is that governing the rights of the holders of securities with regard to the issuer, their forms of collective organization and the scheme for redemption and reimbursement of the securities; while Spanish law determines the capacity, the competent body and the conditions for adopting the resolutions approving the issue.

In addition, if the Notes are admitted to trading on the unregulated market in Ireland, Luxembourg or any other alternative market, they are subject to the listing and disclosure requirements required by such markets.

If high yield bonds are offered, sold or distributed to the public in Spain, except in circumstances which do not constitute a public offer of securities in Spain in accordance with Spanish law on the securities market, or listed on the market Spanish regulated, the issuer must register a prospectus with the Spanish Securities Market Commission to comply with the minimum disclosure requirements of the Prospectus Regulation.

If the High Yield Bonds are admitted to trading on the Alternative Market for Fixed Income (MARF), an information note is required and must be approved by the MARF in accordance with Circular 2/2018, and an information document. The private issue with the main terms and conditions of the issue must be registered with the Spanish Securities Market Commission. Disclosure requirements are similar to those contained in European offering memoranda.

Product use

Are there any limits on the use of proceeds from an issue of high yield securities by an issuer?

There are no restrictions in Spanish law on the use of the proceeds of an issue of high yield debt by an issuer. However, if these products are used to finance or refinance the acquisition of its shares or its parent company (or, in certain cases, companies within the same group), these bonds cannot be guaranteed or guaranteed by a Spanish guarantor. , as this would violate the prohibition on financial assistance. Therefore, these limitations would restrict the ability of the Spanish guarantors to grant guarantees or guarantee the financing used for this acquisition.

Investment Restrictions

On what grounds, if any, could an investor be prevented from investing in high yield securities?

There are no specific provisions preventing Spanish investors from investing in high yield securities. Despite this, there are a number of rules to protect retail investors that could make it very difficult to sell these products.

Closing mechanics

Are there any particular closing mechanisms in your jurisdiction that a high yield debt issuer should be aware of?

The approval of Law 5/2015 considerably simplified the closing mechanism in Spain. The main requirement, if the issuer is a Spanish company, and assuming that the terms of the bonds are governed by foreign law and the bonds are not admitted to trading on a regulated or alternative market in Spain, is the execution of a public document of delivery and its deposit in the commercial register, which is desirable. In addition, if the issue is guaranteed, the relevant guarantors must also appear before a notary public when the deed of issue is issued.