Credit Linked Notes (CLNs) are one of the best ways to enter the international borrowing market. CLNs are tailor-made debt securities denominated in foreign currency for which an international bank with a high credit rating acts as the issuer. These notes are issued on a loan granted by the issuing bank to the borrowing company. Nowadays, CLNs are the most rapid – from 2 to 6 weeks – and relatively most cost-effective way for a company to raise unsecured funds by means of public debt instruments. CLNs offer a number of advantages compared to issuing bonds:
These include:
These include:
- the ability to select any currency for the issue;
- no pledge of assets and/or cash flows required;
- no need for state registration of the issue or credit ratings;
- relatively short timeframe for structuring the transaction;
- diversification of financing sources;
- a platform for the issuer to enter the Eurobonds and IPO markets.
- the issuer can create a public history abroad by involving foreign investors in the placement;
- no strictly regulated information disclosure requirements for CLNs;
- relatively low overhead expenses.
- optimizing the structure of the issue in light of market conditions;
- coordinating actions to select the jurisdiction and registration of the issuer of the notes;
- assisting in the selection of legal consultants in charge of preparing the documentation;
- coordinating all actions of legal consultants and the client’s representatives in charge of information disclosure;
- drafting marketing materials and consulting with the client’s representatives on meetings held with Western investors;
- arranging and holding road shows for the issue;
- book-building for CLNs;
- executing bids to support issue liquidity;
- bridge financing until the credit notes are placed;
- analytical support during the lifetime of the notes.
