Securities administration - International (CBL)

28.02.2012

This section concerns international securities primarily issued in and deposited with CBL. For details regarding those international securities that are eligible in CBL but primarily issued in and deposited with a local CSD, please refer to the Market Profile for the respective market.

Income collection

Record date aEx-dateBasic for entitlementStandard interest calculation rule
Debt instruments:
Global bearerPayment date - 1Record date + 1Settled position on record dateISMA rule 251
Global registeredPayment date - 15Record date + 1Settled position on record dateISMA rule 251
Physical, bearerPayment date - 1Record date + 1Settled position on record dateISMA rule 251
Physical, registeredPayment date - 15Record date + 1Settled position on record dateISMA rule 251
Equities and equity-linked instruments:
ELNs and WarrantsPayment date - 1
(-15 for physical certificates)
Record date + 1Not applicableNot applicable
Equities and Depository ReceiptsDepending on the rules that apply in the country of the issuerSettled position on record dateNot applicable
Investment FundsNot definedNot definedSettled position on record dateNot applicable

a. Exceptions may apply, depending on the terms and conditions of the security.

Corporate actions

Most common corporate events

Most common corporate events

  • Conversion

    Convertible bonds effectively represent a cash value that can be exchanged (converted) into underlying shares, which are usually but not exclusively shares issued by the original bond issuer. The underlying shares can be received and (assuming market eligibility) credited to a Clearstream Banking account. Alternatively, delivery can be arranged to an external subcustodian for the account of the holder of the bond that is subject to the conversion.
  • Consent Solicitation

    A Consent Solicitation is often required if an issuer wants to change the terms of an already issued bond, for example, to increase the minimum denomination. Normally, the required quorum level is determined in the terms of the issue. However, the issuer may derogate the determined quorum level and require consent from 100% of the bondholders. When Consent is achieved, the bondholders are notified and any core data changes are made in the ICSD system.
  • Default

    A Default occurs when an issuer fails to make payment of interest, maturity or put option proceeds on the dates determined in the terms of the issue. There are two types of Default:
    - Technical Default: the issuer has not paid on due date but pays within the “grace period”, normally payment date +30 calendar days;
    - De Facto Default: the issuer fails to pay even when the “grace period” has ended.

    With De Facto Defaults, the issuer may subsequently repay all overdue sums over a period of time and, once the payments are in order, the issue is no longer detailed as being “in default”. Sometimes, a Default can lead to a debt restructure (see Exchange Offer, below) or to a complete liquidation of the issuer as a result of bankruptcy or insolvency proceedings. In the case of insolvency, the recovery of unpaid funds can take many years and, since bondholders own the debt of the company and not the capital, recovery rates are generally considered low.
  • Exchange Offer

    Exchange Offers are unpredictable events, that is, they are not foreseen in the terms and conditions of the issue. Consequently, they can occur at any time during the life of the issue and may result from a debt restructuring. The ICSD will notify holders, collate instructions and pass these to the agent. Upon receipt of the new proceeds, the ICSD will distribute these to the holders in exchange for the old bonds, which will be cancelled in proportion to the acceptance level of the participating holders.
  • Exchange Option

    Exchange Options, unlike Exchange Offers, are foreseen in the terms and conditions of the issue. Similar in process to an Exchange Offer, an Exchange Option may allow an international debt security issued under Regulation S to be exchanged, on a 1:1 basis, for a bond issued in the U.S. domestic market under Rule 144a. Another example could be when the overall U.S. restrictions are lifted on eurobonds, after the relevant papers have been filed with the SEC in the U.S.A., and holders of the Reg S or 144a tranches of a eurobond issue may exchange them, on a 1:1 basis, for a new and completely unrestricted note, with the same terms as the original but without the U.S. Securities Laws’ restrictive covenants
  • Put Option

    Put Options can be exercised on bonds that contain respective clauses that allow the holder to request the issuer to redeem their bonds, normally on a specific coupon payment date and at a fixed rate. For bonds that are subject to Net Asset Value calculations, the rate payable may only be known after the Put instructions are collated by the paying agent. Bonds may be “put” during specific periods during the life or as frequently as monthly (which is known as an Open Put Option).
  • Reverse Convertible Note (RCN) or Equity-Linked Note (ELN) Maturity

    RCN or ELN Maturities are determined by the issuer, based on predetermined criteria within the terms and conditions of the issue.
    When the fixing date (normally close of business two business days prior to maturity date) is reached, the issuer sends a notice to advise whether the note will be redeemed for cash or for an underlying (which could be a bond, an amount of equities or even commodities, such as gold bullion).
  • Warrant Expiration/Exercise

    There are different warrant types: U.S. or European style.
    Warrants may expire in or out of the money, with positive or negative results for the warrant
    holders.
    Warrants may be exercised during their life, depending on the type, with the payment of exercise costs, to receive an underlying item of value or securities (shares, bonds, commodities).

Events on equities and investment funds include, but are not limited to, bonuses, capital distributions, choice dividends, exchanges, issue data changes, liquidations, mergers, reorganisations, purchase offers, repurchase offers, stock dividends, stock splits, reverse splits, subscription offers, tender offers.

Organisation of AGM/EGMs

Some bond issuers may decide to hold a Bondholder Meeting. When the meeting is notified via
Clearstream Banking, the bondholders have a number of ways in which to participate in the meeting and voting.

  • Bondholders may vote by proxy, in which case the votes are sent to Clearstream Banking or Voting service provider, who in turn passes the information to the issuer’s agent no later than 48 hours before the meeting.
  • Bondholders may attend meetings in person, in which case, to be allowed entry to the meeting, they are required to send to the issuer’s agent their contact details and confirmation of the Driving Licence, Passport or Identity Card of each attendee.

Instructions from bondholders, will result in the bonds being blocked from trading until the results of the meeting are announced.

Market compensation rules

Please refer to the Entitlement Compensation Rules Guide and the Customer Handbook.