{"id":1069,"date":"2022-05-12T16:27:05","date_gmt":"2022-05-12T16:27:05","guid":{"rendered":"https:\/\/www.guiadoemitente.pt\/?p=1069"},"modified":"2022-06-08T15:28:08","modified_gmt":"2022-06-08T15:28:08","slug":"5-1-3-offering-and-placement","status":"publish","type":"post","link":"https:\/\/issuers-guide.buzzvel.work\/en\/5-1-3-offering-and-placement\/","title":{"rendered":"5.1.3 Offering and placement"},"content":{"rendered":"\n

Introduction<\/h3>\n\n\n\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

Following the issuing of the Prospectus, which is published on both the regulator\u2019s and the Company\u2019s website, the public offer period begins and the order book to collect orders from the institutional investors opens, which normally takes between 1 and 2 weeks.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Management roadshow<\/h3>\n\n\n\n

The Management roadshow refers to a series of sales presentations pitched by the Company\u2019s top executives together with the Financial Advisor(s) to a wide range of potential institutional investors, allowing them to have a closer contact with the Company.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Roadshow Events<\/strong><\/p>\n\n\n\n

Roadshow events are held across different locations which are pre-selected by Management according to the criteria they belief target investors will value the most.<\/p>\n\n\n\n

The goal is to present the Company\u2019s key executives and its strategic vision to investors and lead them to participate in the Bond Offering. During this phase, Management will present the Company\u2019s strengths and growth perspectives, and address concerns expressed by investors and analysts during the previous stages.<\/p>\n\n\n\n

Among the wide number of aspects that the Management presentations on roadshow events, usually the following ones are always present:<\/p>\n\n\n\n

\u25ba The background and history of the Company;<\/p>\n\n\n\n

\u25ba Information about the top executives of the Company;<\/p>\n\n\n\n

\u25ba Strategic Plan;<\/p>\n\n\n\n

\u25ba Business Plan;<\/p>\n\n\n\n

\u25ba Investment Plan;<\/p>\n\n\n\n

\u25ba Historical financial performance analysis;<\/p>\n\n\n\n

\u25ba Bond Offering rationale and intended goals.<\/p>\n\n\n\n

Traditionally roadshows are held in a format of live meetings that take place in physical venues, but in the last years it is becoming more and more common to hold part of the roadshow presentations online through online videos and podcasts. At the end of each session there is always a Q&A session where investors\u2019 representatives have the freedom to ask general questions about the Company and the Bond Offering process.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Opening of the order book<\/strong><\/p>\n\n\n\n

When the public offer period starts and the Management roadshow targeted to potential institutional investors begins, the financial advisor(s) opens the order book and starts receiving preliminary bidding orders from these investors, which will include the number of bonds they wish to acquire and the price (i.e. coupon rate) they are willing to pay within the pre-defined range, if the bookbuilding method is used for the bond offering price definition.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Pricing<\/h3>\n\n\n\n

Bond valuation<\/strong><\/p>\n\n\n\n

When valuing bonds, the following factors need to be considered:<\/p>\n\n\n\n

\u25ba Maturity<\/p>\n\n\n\n

\u25ba Coupon rate<\/p>\n\n\n\n

\u25ba Periodicity of coupon payments<\/p>\n\n\n\n

\u25ba Yield of similar bonds traded in the market (similar maturity, periodicity, similar default risk of the issuer, similar seniority, etc.).<\/p>\n\n\n\n

When offering bonds, the Issuer needs to decide if it wants to issue the bonds at par value (i.e. the amount that will receive from investors will be the same as the principal that needs to be paid at the maturity of the bond) or different from par value (choosing instead the coupon rate).<\/p>\n\n\n\n

If the issuer wants to offer bonds at par value, an appropriate coupon rate must be assessed. To do so, it is necessary to analyse the yield to maturity of similar bonds that are being traded (i.e. with similar risk).<\/p>\n\n\n\n

If the issuer prefers to define the interest payments (i.e. coupon rate), the price of the offered bond will be equal to the sum of the cash flows estimated (coupons plus principal) discounted at an appropriate yield to maturity. As explained above, this yield will be obtained from yields of similar bonds traded in the market).<\/p>\n\n\n\n

To successfully execute the valuation of the bond, the issuer may request support from a a financial advisor.<\/p>\n\n\n\n

Given the inherent subjectivity and discretionary nature of the definition of the appropriate price of the bond or coupon rate, and in order to avoid information asymmetry, it is recommended that Issuers perform and, if necessary, publish a valuation analysis that is as consistent and transparent as possible.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Price determination<\/strong><\/p>\n\n\n\n

The price of bonds in a Bond Offering is commonly determined through the fixed price method during the preparation of the Prospectus. In the fixed price method the number of available securities and the Offer price of the securities is known in advance. Allocation of securities if investors demand exceeds the number of bonds being offered, is made on a pro-rata basis.<\/p>\n\n\n\n

Although the price is fixed prior to the offering, during the offering period, depending on the success or failure of the placement of the securities to the retail investors, the Issue may decide to increase or reduce the size of the Offering.<\/p>\n\n\n\n

The principle of fair and equal treatment of investors applies to all offers, i.e. final offer price must be the same for retail and institutional investors. <\/p>\n\n\n\n

As soon as the final number of securities offered are determined, these must be notified to the CMVM and disclosed to the public.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Placement of the Public Offering<\/h3>\n\n\n\n

Investors targeted by the Offering<\/strong><\/p>\n\n\n\n

The targeting of investors in a debt offering is not exactly the same as in an equity offering. Whereas in the latter there is an offering to institutional investors that plays a key role in the process and the success of an IPO, the role of these investors is much more limited in debt issuances. The purpose and the measure of success of a debt offering is much more tied to the retail offering.<\/p>\n\n\n\n

Effectively, institutional investors may be involved in a very early phase (pilot fishing), to gauge and drum up interest in the issuer and the transaction and thus assist in the definition of the pricing of the offering (in this case, the size and interest rate of the debt issuance), but usually there is no formal bookbuilding phase running in parallel with the retail offering. Accordingly, in debt offerings there is typically no special allotment of securities to institutional investors.<\/p>\n\n\n\n

In those cases \u2013 in principle, limited cases \u2013 where there may be an institutional and a retail offering running in parallel the description of the offer as a whole must be set out in the Prospectus, with a clear definition of the breakdown of the offer between investor types. In those cases the Company may consider reserving or prioritizing all or part of the offer for one of these categories of investors (institutional investors and retail investors). In this case, the Company shall ensure that it clearly indicates that intention in the Prospectus and in promotional communications. Regarding the allocation of part of the offer to specific typologies of investors, it is common to put in place clawback provisions to add flexibility to the Offer which establish that, depending on investors\u2019 demand during the offer period, the Company can re-assign a small percentage of bonds from one tranche to another.<\/p>\n\n\n\n

When no distinction is made between different categories of investors and\/or no allotment is reserved for a specific category of investors in a Public Offering, the Issuer and, where applicable, the members of the placement\/underwriting syndicate, must ensure that the Public Offering is effectively open to all investors on the same terms and conditions without distinction or discrimination and that the bonds are allocated in an equitable manner. <\/p>\n\n\n\n

Similarly, the conditions offered in the retail tranche in the case of a Public Offering of bonds must be identical to those offered in the tranche reserved for institutional investors. Moreover, intermediaries are legally obliged to ensure fair treatment of their (different categories of) clients in order to meet the demands of different investors in a meaningful way.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Offering Period<\/strong><\/p>\n\n\n\n

The length of the period during which bonds are offered to the public varies greatly from one transaction to another and usually ranges from around 1 to 2 weeks. The offering period starts on the day following the approval of the Prospectus by the financial markets regulator and its publication and it may be extended depending on the success of the subscriptions and market conditions.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Acceptance of the Offer<\/strong><\/p>\n\n\n\n

The investor\u2019s statement of acceptance of the public offering is done by an order addressed to any financial intermediary legally authorized to render the service of the reception, transmission or execution of orders on third party\u2019s behalf. Such acceptance may be revoked up to five days before the end of the offer period, or within a shorter timeframe, whenever stated in the Prospectus.<\/p>\n\n\n\n

Acceptance orders placed by investors may take several forms, including:<\/p>\n\n\n\n

\u25ba Limit orders: a fixed number of bonds with a price limit above which the investor will not take part in the Bond Offering;<\/p>\n\n\n\n

\u25ba No limit orders: a fixed number of bonds irrespective of the final Bond Offering price;<\/p>\n\n\n\n

\u25ba Orders where investors define the number of bonds to be purchased at various price levels;<\/p>\n\n\n\n

\u25ba Orders where investors define the amount for which they will purchase bonds, independently of the final price, in which case the number of bonds purchased at various price levels is not defined.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Modification or Revision of the Offer<\/strong><\/p>\n\n\n\n

The offer contents may only be modified, within a reasonable period and subject to the CMVM’s authorisation, in case of an increase of the offer risks due to an unforeseen and substantial change of the circumstances upon which, as known by investors, the decision to launch the offer is based.<\/p>\n\n\n\n

Moreover, until two days before the end of the offer period and subject to the CMVM\u2019s authorisation, the offeror may review the terms and conditions of the offer, provided they are not less favourable, in global terms, to investors.<\/p>\n\n\n\n

<\/p>\n\n\n\n

What are the effects of the offer revision?<\/strong><\/p>\n\n\n\n

\u25ba Modifications to the offer may lead to extensions of the respective time periods, decided upon by the CMVM either on its own initiative or at the request of the offeror.<\/p>\n\n\n\n

\u25ba Statements of offer acceptance prior to amendment are considered effective for the modified offer. Nonetheless, the referred acceptance can be revoked.<\/p>\n\n\n\n

\u25ba The amendment should be immediately disclosed by the same means used for the prospectus disclosure.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Revocation and Withdrawal of the Offer<\/strong><\/p>\n\n\n\n

In case of change of circumstances, the offeror may, instead of modification, revoke the offer, subject to the CMVM\u2019s authorisation.<\/p>\n\n\n\n

Whenever the CMVM identified that the offer contains any irreversible illegality or breach of regulation, the CMVM will order the offer\u2019s withdrawal.<\/p>\n\n\n\n

The revocation and the withdrawal of the offer are published by CMVM, at the offeror\u2019s expense, by the same means used to disclose the prospectus.<\/p>\n\n\n\n

The revocation and withdrawal of the offer determines the ineffectiveness of the offer and of the acts of acceptance prior or subsequent to the revocation or withdrawal and whatever has been delivered must be returned.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Offer Suspension<\/strong><\/p>\n\n\n\n

The CMVM will suspend the offer when any reparable illegality or violation of regulation is discovered. The defects that caused suspension need to be corrected in maximum 10 working days. Afterwards, if no correction is made, CMVM will order the offer\u2019s withdrawal.<\/p>\n\n\n\n

If the offer is suspended, the addressees of the offer may withdraw their statements until the fifth day following suspension, having the right to restitution.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Allocation of bonds<\/h3>\n\n\n\n

The allocation of bonds in the Public Offering determines the number of bonds allocated to the investors that have accepted the Public Offering. In accordance with the principle of fair and equal treatment of investors, the Company will ensure, in consultation with the members of the placing\/underwriting syndicate, that a balanced treatment of all investors is in place.<\/p>\n\n\n\n

The Prospectus should contain information on how the securities will be allocated in the event of oversubscription. A general rule, the allotment method should be made on a pro-rata basis, but other methods may be chosen subject to the CMVM\u2019s approval.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Assessment of Results, Settlement and Listing<\/strong><\/p>\n\n\n\n

At the end of the offering period, the final number of bonds is allocated to each investor and, if applicable, the underwriting agreement for this offering is signed between the Company and the financial intermediaries.<\/p>\n\n\n\n

On the following day, the results of the Public Offering are assessed, by the Company\u2019s financial advisor or in a special Euronext\u2019s stock exchange session.<\/p>\n\n\n\n

In case of a private placement, the issuance of bonds is subject to commercial registration, a formality necessary for the settlement of the offer, unless the admission of the same bonds to trading on a regulated securities market has occurred within the time limit for requesting registration.<\/p>\n\n\n\n

The settlement occurs with the payment to the Company of the proceeds of the offering vs. the delivery of bonds to the investors (made through the credit of their securities accounts by the financial intermediaries through which the subscription orders were processed).<\/p>\n\n\n\n

The bonds will only be effectively admitted to trading on the stock market following the settlement of transaction.<\/p>\n","protected":false},"excerpt":{"rendered":"

Introduction Following the issuing of the Prospectus, which is published on both the regulator\u2019s and the Company\u2019s website, the public offer period begins and the order book to collect orders from the institutional investors opens, which normally takes between 1 and 2 weeks. Management roadshow The Management roadshow refers to a series of sales presentations […]<\/p>\n","protected":false},"author":1,"featured_media":2572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1"],"acf":[],"_links":{"self":[{"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/posts\/1069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/comments?post=1069"}],"version-history":[{"count":6,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/posts\/1069\/revisions"}],"predecessor-version":[{"id":2569,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/posts\/1069\/revisions\/2569"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/media\/2572"}],"wp:attachment":[{"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/media?parent=1069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/categories?post=1069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/issuers-guide.buzzvel.work\/en\/wp-json\/wp\/v2\/tags?post=1069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}