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The Association of German
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Schuldscheindarlehen
Private Placements
Best practice for European Capital Markets
Union
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Schuldscheindarlehen
Private Placements
Best practice for European Capital Markets Union
Preface
Introduction by the Managing Director
Following European Banking Union, the Capital Markets Union is
the major project to be implemented by the European Commission
over the next few years. The EU Commission is determined to improve
company financing – through integrating market infrastructure, promoting capital markets-based financing tools, by giving institutional
and private investors a greater role in the long-term financing of companies and infrastructure projects, and by standardising credit information – with the objective of promoting growth and employment.
The Association of German Public Banks (Bundesverband Öffentlicher
Banken Deutschlands – "VÖB") welcomes the Capital Markets Union
project. For this reason, we have contributed to the consultation process concerning the European Commission's plans at a very early stage,
and in a constructive manner. We consider the interim progress of this
consultation process to be positive: the European Commission has recProf. Dr. Liane Buchholz
ognised the credit supply from core banking relationships as a key financing component for small and medium-sized enterprises (SMEs). In
addition, the Commission considers traditional bank loans and capital
market instruments as complementary – not alternative – sources of financing. Looking at loans and
capital markets financings together, we consider Schuldscheindarlehen to be best practice for achieving the
objectives of Capital Markets Union. For SMEs with access to the capital markets, Schuldscheindarlehen
are a particularly non-bureaucratic, low-cost source of financing that is relatively easy to implement. A
growing number of international investors and issuers is proof to the fact that Schuldscheindarlehen are a
tried-and-tested instrument in corporate financing.
The purpose of this brochure is to introduce Schuldscheindarlehen and their key features: using examples
from our member institutions who are market leaders for Schuldscheindarlehen – and who command a
high degree of relevant expertise – we outline the product's simple and unbureaucratic functioning, and
how Schuldscheindarlehen relate to the political goals of European Capital Markets Union. We firmly
believe that Schuldscheindarlehen can evolve into a successful pan-European product that contributes to
improving financing terms for companies across the European Union.
We hope you will find the brochure interesting, and look forward to your comments and questions.
Yours sincerely,
Prof. Dr. Liane Buchholz
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
3
Contents
Contents
Preface
3
1 An attractive financing vehicle – for issuers and investors
7
2 The role of German public banks in the Schuldscheindarlehen market
10
3 Capital Markets Union and Schuldscheindarlehen
12
4 International profile
14
Appendix: B
est-practice case studies from public banks
17
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
5
An attractive financing vehicle – for issuers and investors
1 An attractive financing vehicle – for issuers
and investors
With origins dating back to the 19th century, Schuldscheindarlehen have regularly been used as a financing instrument by many small to medium-sized enterprises for a long time.
A Schuldscheindarlehen is an unsecured financing instrument that is often used as base financing, covering the stable financing requirements. The principal underwritten by investors is fully disbursed to the
issuer, with the full issue volume usually repaid at maturity. Compared to the documentation required for
a corporate bond issue, the administrative requirements for a Schuldscheindarlehen are clearly less demanding: publication and documentation costs are lower; no external rating is required.
Given the more difficult market conditions for corporate bond issuance and the stricter requirements
for bank loans – especially for long-term facilities – in the wake of the financial crisis, demand for Schuldscheindarlehen has grown over recent years, making them one of the most important sources of independent debt capital. Schuldscheindarlehen fulfil the needs of many companies for a financing instrument
involving low administrative effort – thanks to their simple, uncollateralised structure and straightforward
documentation. Moreover, issuers of Schuldscheindarlehen benefit by retaining credit lines with their core
banking relationships (Hausbankbeziehung), and by gaining access to new investors.
SMEs are increasingly active as issuers of Schuldscheindarlehen: in addition to the advantages described
above, these instruments offer independence in the context of debt financing, with flexible requirements
in terms of documentation and publication. This is due to the fact that issuers determine the scope of
investor relations; in contrast to bond issues, investors are known to issuers.
Companies placed Schuldscheindarlehen in excess of €9 billion during 2014 – a year-on-year increase of
more than 20 per cent. And 2015 also started with a sensation: issue volumes during the first half of the
year alone totalled €9 billion, with a €2.2 billion SSD placement by ZF Friedrichshafen AG accounting
for almost 25 per cent of the total volume.
The following criteria represent the favourable aspects of Schuldscheindarlehen:
• Nominal issue amounts starting from €10 million
• Short and straightforward contractual documentation, allowing for a high degree of structuring flexibility
• An additional instrument to diversify the financing mix by instruments and currencies
• An opportunity to broaden the existing investor base
• Financing of company growth and investment projects – without being tied to a particular project
• A corporate financing tool close to the capital markets, without the need for (expensive) external
ratings
• An option for raising funds relatively quickly, without an exchange listing that attracts public attention
• Low transaction costs
The successful development of the Schuldscheindarlehen market clearly shows that this product is very
attractive to investors as well. In a low interest rate environment, this market offers straightforward op-
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
7
portunities to gain exposure to attractive companies, with relatively attractive yields. Broad placements
require issuers of good credit standing, which is why the banks involved maintain high credit quality
standards when selecting corporate issuers.
Compared to exchange-listed bonds, Schuldscheindarlehen offer a significant benefit since they can be
carried at amortised cost: as an unlisted loan product, promissory note loans are not subject to mark-tomarket requirements. This helps avoid volatility of results due to mandatory measurements – the fact that
these products are barely traded reflects their long-term investment character. Investors predominantly
hold Schuldscheindarlehen until maturity.
Investors: who invests in Schuldscheindarlehen?
Banks
Regional banks and Landesbanken
Savings banks and cooperative
banks
Institutional investors
Insurance companies
Specialist institutions
Retirement benefit schemes
Foreign banks
Staff pension schemes
Family Offices/corporates
Preferred maturities
Generally 5–7 years;
up to 10 years in individual cases
Preferred maturities
5–10 years
Preferred maturities
From 5 up to 20 years;
longer maturities in certain cases
Spread sensitivity
high
Very high correlation with
own cost of funding and cost of
capital
Spread sensitivity
medium
Funding through
deposit-taking and
maturity transformation
(coupon view)
Spread sensitivity
medium to high
Focus on all-in yield, and on
generating a minimum return
(coupon); predominantly fixed-rate
issues
Source: LBBW
Thanks to the growing orientation of larger municipalities and local authorities towards the capital
markets, public-sector entities are increasingly turning to Schuldscheindarlehen. A higher level of standardisation and a broadening of the investor base can be highly beneficial for financing municipal projects.
Timeline of a Schuldscheindarlehen placement
Given defined requirements and the streamlined documentation requirements for Schuldscheindarlehen
issues, these can be placed within a very tight timeframe. Following initial discussions between the issuer
and the arranging bank, the preparatory phase starts: over a period of usually between two and four weeks,
the key parameters of the financing are negotiated and summarised in an indicative term sheet.
Once the bank has been mandated, it will prepare the documentation as well as credit research. Documentation for a Schuldscheindarlehen usually comprises around 20 pages; parts of this are negotiated
during this process.
At the start of the marketing process, the documentation package – including the Investor Term Sheet,
credit research, the transaction documents, as well as information concerning the issuer's financial position and performance – is forwarded to investors. Each investor will then independently initiate its
internal credit process, which involves an individual review of all risks and concludes with obtaining the
approval of corporate bodies and committees. If approval is granted, the investor will express a firm commitment to participate in the issue.
The period of time between the mandate and disbursement of the issue proceeds is usually between six
and ten weeks – which is faster than for corporate bonds or syndicated loans.
8
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
An attractive financing vehicle – for issuers and investors
Process flow of a Schuldscheindarlehen transaction
Issuer
NORD/LB
Investors
Obtaining approval
of corporate bodies
Signing
and committees documentation
First indicative
financing offer
Initial ideas regarding
group financing
Issuing the
mandate
Updated financing
offer
Issuer submits planned
financing requirements
Analysis
Preparing
documents
Fixing
Inviting
banks
Final
Preparing, negotiating
Term Sheet
and compiling
negotiation documentation,
ready for signing
(NORD/LB and issuer)
Issuer submits
documentation package
for structuring
(max. 4 weeks)
Preparing
credit research
Structuring
(max. 3 weeks)
Pricing and
allocation
Aftersales
service
Disbursement/
commitment
Presentation
to banks,
or one-to-one
discussions
Placement
(max. 6 weeks)
Ongoing
coverage
Source: NORD/LB
Sample Term Sheet
Borrower
Intended use
Type
Rating
Status
Placement
Launch size
Disbursement
Repayment
Terms
Reoffer Spread
Arrangement fee
Success fee
Day-count convention;
interest payment
Value date
Documentation
[]
General corporate financing and refinancing of existing loans
Schuldscheindarlehen; transferable by way of assignment at any time
No external rating
Senior unsecured
Best efforts
[EUR XXX million] (issue size may be increased upon demand)
100 %
Bullet repayment at 100 %, upon maturity
[]
xxx bp – xxx bp
[ ] bp of the nominal amount
[ ] bp of the nominal amount
Variable: act/360; quarterly/semi-annually in arrears
Fixed:
act/act; annually in arrears
[]
Schuldscheindarlehen under German law:
• Cross-acceleration
• Negative pledge
• Restriction on asset disposal
• Pari-passu clause
• Change-of-control clause
• Disposal of assets
€500,000 or higher multiples thereof
Minimum denomination
Eligibility for refinancing
with Deutsche Bundesbank
Arranger and Paying Agent Norddeutsche Landesbank Girozentrale
[€XXX p.a.]
Paying Agent fee
Source: NORD/LB
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
9
2 The role of German public banks in the
Schuldscheindarlehen market
Traditionally, German public banks have played a prominent role in the Schuldscheindarlehen market.
During the first half of 2015, Landesbanken as arrangers of corporate Schuldscheindarlehen had a market
share of more than 60 per cent – reflecting a high level of acceptance both from capital-seeking companies
and from investors.
Corporate Schuldscheindarlehen – league table for the first half of 2015 –
"Landesbanken still ahead, with foreign banks catching up"
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
Lender
LBBW
BayernLB
Landesbank HessenThüringen (Helaba)
Commerzbank
UniCredit
DZ BANK
Société Générale
HSBC
BNP Paribas
Deutsche Bank
NordLB
IKB
Crédit Agricole
Pro-rata (€)
2,729,086,799.14
1,905,833,333.33
Full credit (€) Deals
4,827,753,465.80
21
4,305,500,000.00
13
Market share
30.57 %
21.35 %
695,290,072.86
1,197,913,479.05
9
7.78 %
604,050,000.00
484,500,000.00
382,466,666.67
374,465,672.57
314,300,000.00
248,000,000.00
206,500,000.00
203,666,666.67
145,000,000.00
126,132,339.24
1,337,000,000.00
1,150,500,000.00
1,419,000,000.00
1,142,264,678.47
916,500,000.00
986,000,000.00
299,000,000.00
471,500,000.00
180,000,000.00
252,264,678.47
10
9
5
4
5
4
3
6
4
1
6.76 %
5.42 %
4.28 %
4.19 %
3.52 %
2.77 %
2.31 %
2.28 %
1.62 %
1.41 %
Source: Thomson Reuters
Corporate Schuldscheindarlehen – league table for 2014
Rank
2
3
4
5
Lender
Landesbank HessenThüringen (Helaba)
BayernLB
LBBW
Commerzbank
HSBC
6
UniCredit
888,558,333.33
1,894,950,000.00
11
8.13 %
7
DZ BANK
Raiffeisen Bank
International
NordLB
BNP Paribas
IKB
Erste Group
Landesbank Berlin
470,573,663.16
1,648,897,447.78
7
4.30 %
467,818,124.97
1,231,655,833.21
8
4.28 %
435,000,000.00
347,480,538.19
265,500,000.00
188,228,845.82
120,000,000.00
890,000,000.00
761,691,614.56
565,500,000.00
474,686,537.47
120,000,000.00
10
3
3
3
1
3.98 %
3.17 %
2.42 %
1.72 %
1.09 %
1
8
9
10
11
12
13
Pro-rata (€)
Full credit (€) Deals
Market share
2,206,390,566.84
3,793,775,974.75
27
20.18 %
1,715,655,304.13
1,226,528,996.84
1,130,833,333.33
986,750,000.00
3,731,392,370.68
2,410,221,747.91
2,188,500,000.00
2,148,500,000.00
18
16
14
9
15.69 %
11.22 %
10.34 %
9.02 %
Source: Thomson Reuters
10
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
The role of German public banks in the Schuldscheindarlehen market
A sector breakdown shows that issues are diversified across all economic sectors, with SMEs continuing
to account for the lion's share of Schuldscheindarlehen.
Corporate Schuldscheindarlehen – sector analysis for the first half of 2015
Source: LBBW
The high degree of acceptance Landesbanken enjoy in the market is a reflection of their long-standing
and close relationships with companies, established in particular within the scope of core banking relationships (Hausbankbeziehung). Likewise, public banks are deeply rooted in their respective economic
regions, which enables them to carefully assess risks in a comprehensive manner. This translates into very
low historical default rates. Landesbanken generally retain a portion of the issues they arrange on their
books. This is a clear signal – especially to investors taking a long-term view – that Landesbanken assume
responsibility for their risk assessments.
Corporate Schuldscheindarlehen – rating analysis H1 2015 – predominantly BBB-/BBB/
BBB+ ratings1
not rated by LBBW
21 %
AA/AA- A
2% 4%
A4%
A+
4%
BB2%
BBB+
21 %
BB
4%
BB+
2%
BBB17 %
BBB
19 %
Source: LBBW
1 Where no external rating was available, LBBW's rating assessment was mapped to S&P's rating scale. Whilst the majority of issuers have no
external ratings, according to banks' rating analyses they are within the investment-grade range.
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
11
3 Capital Markets Union and
Schuldscheindarlehen
It is the political goal of the present European Commission to establish the EU as a stable economic
area that is ready for the future. To support this political goal, the Commission wishes to establish a single
EU market for capital. The objectives of a single EU capital market – integrated by way of a uniform
European regulation and supervision – are to generate growth momentum, and to contribute significantly
to financial market stability. The promotion of capital markets-based equity and debt instruments which
are highly correlated to the real economy, together with a stronger involvement of private capital in the
long-term financing of companies and infrastructure projects, is set to boost economic growth and employment, especially in European regions suffering from structural weakness.
Initiatives planned by the European Commission to further open up capital markets access for SMEs
include expanding an EU-wide market for private placements2. German public banks have advocated
the successful practice of issuing Schuldscheindarlehen as a 'best-practice' case for pan-European, capital
markets-based corporate financing.
As capital markets-based debt instruments, the features of Schuldscheindarlehen are very closely aligned
with the political goals of Capital Markets Union. Likewise, Schuldscheindarlehen are a good example for
the responsible exercise of an intermediary function; they reflect the major importance of a functioning
banking market that is rooted in economic regions – an essential prerequisite for a successful European
Capital Markets Union.
Objectives of EU Capital Markets Union
and Schuldscheindarlehen
Promotion
Long-term funding for the real
economy
Improving the availability of
financing for enterprises –
especially for SMEs
Promoting cross-border capital
flows
–
–
–
A financing instrument with a
long-term investment horizon
– especially appreciated buy
'buy-and-hold' investors
Capital markets access at
relatively low cost
(no external rating –
streamlined documentation)
Increasing internationalisation
of the Schuldscheindarlehen
market
Presentation by VÖB
Viability for SMEs
Significant regulatory requirements, a lack of in-house expertise, as well as the general efforts (in terms
of cost and time) involved in raising capital on the regulated capital markets constitute major burdens for
many SMEs seeking to access the financial markets. In contrast, Schuldscheindarlehen involve relatively
small transaction expenses, making them a highly viable instrument – especially for SMEs ready to access
the capital markets – providing a simple, low-cost and straightforward channel to raise capital, even for
smaller requirements starting from €10 million. Companies are highly appreciative of the very lean docu2 In chapter 4.1, the Green Book expressly provides for the promotion of specific financial instruments: "Where common standards are not necessary, or difficult to achieve, policy efforts may instead be directed to establishing best practices across the EU to promote the development of certain
financial instruments."
12
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
Capital Markets Union and Schuldscheindarlehen
mentation, as well as the fact that exploring a broader investor base does not require an expensive external
rating. Higher transaction costs (due to more extensive transparency requirements or an expansion of the
regulatory framework, for example) would burden access to this financing instrument for SMEs.
Broadening the investor base whilst maintaining the core banking relationship
Based on long-term client relationships, core banks have a deep understanding of companies' individual
financial situation. This allows them to develop financing solutions tailored to each company's needs,
potentially above and beyond credit lines already in place. The fact that a Schuldscheindarlehen issue may
reduce dependency upon banks as financing providers whilst preserving the contact to their core bank –
which supports the company as arranging bank in the issuance process – is a very important factor.
Legal certainty and banks' responsibility in their core business
Their close relationship with companies allows public banks to responsibly assess the risks involved:
historically, Landesbanken have observed a very low proportion of defaults or negative credit events in
the Schuldscheindarlehen market. This demonstrates a tried-and-tested transaction practice which is also
reflected in the increasing demand from international investors. (Please refer to chapter 4 and the appendix for further details, and for practical examples indicating the increasingly international profile of the
Schuldscheindarlehen market.) Over and above the sound credit quality of issuers, Schuldscheindarlehen
also benefit, in particular, from the long-term safety of the applicable legal framework.
Long-term view and the real economy
Typical investor groups for Schuldscheindarlehen are institutional investors with an appropriate longterm investment horizon, such as insurance companies, pension funds and staff pension schemes, asset
managers, savings banks, cooperative banks, as well as national and international commercial banks.
Terms of Schuldscheindarlehen are freely negotiable amongst the contractual parties. They are usually
long-term, with most issues being placed with a five-year maturity; the range extends up to ten years. This
means that Schuldscheindarlehen are instruments with a suitable long-term investment horizon – which
not only allows investors to plan for the long term, but also enables the real economy to realise long-term
investment projects.
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
13
4 International profile
Schuldscheindarlehen have clearly attracted growing interest in several European countries (as well as
outside Europe) for quite some time, but especially during recent years. This applies both to potential investors as well as to companies looking for new financing sources. In addition to countries where Schuldscheindarlehen are a traditional form of financing – including Germany, Switzerland and Austria – companies from France, Belgium and the Netherlands, Italy, Finland and the United Kingdom are increasingly
turning to this product. Outside the EU, the popularity of Schuldscheindarlehen is growing in Brazil, Israel
and Norway. In all cases, interest is focused on long-term maturities, and on a diversification of currencies.
More recent developments show that competition is intensifying. This is due to the entry of internationally active banks into the Schuldscheindarlehen market, in addition to the trend amongst issuers and
investors towards a more international profile. At the same time, the bulk of issuance volume is concentrated amongst medium-sized companies. It is worth noting that not only a broader distribution amongst
countries can be observed – those countries that have joined the market also account for a large portion
of overall market growth for Schuldscheindarlehen.
Issuance by country during the first half of 2015 (breakdown by number of issues)
Source: Helaba
Schuldscheindarlehen under German law can be 'exported'
France
€50,000,000
Schuldschein­
darlehen
2040
Sole Lead
Austria
Denmark
Finland
Switzerland
Austria
Great Britain
€140,000,000
Schuldschein­
darlehen
2020/21/24/29
Joint Lead
€118,500,000
Schuldschein­
darlehen
2020/22
Joint Lead
€120,000,000
Schuldschein­
darlehen
2020/22
Joint Lead
€300,000,000
Schuldschein­
darlehen
2020/23
Joint Lead
€221,000,000
US$100,000,000
Schuldschein­
darlehen
2019/21/24
Joint Lead
€100,000,000
£50,000,000
Schuldschein­
darlehen
2019
Sole Lead
Source: Helaba, LBBW, NORD/LB
14
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
International profile
Investors by country of origin
Source: LBBW
A single perspective for the EU and beyond: a simple structure based on various civillaw regimes
To date, contracts for Schuldscheindarlehen have regularly been drafted on the basis of German law. Given the streamlined concept, there are only few references to the law, which is why many companies and
investors in various countries have accepted this legal framework without problems – accordingly, this has
not impeded the growing international market profile over recent years. On an EU level, it is also possible
to refer to other jurisdictions. Thanks to their brevity and clarity, Schuldscheindarlehen agreements can
easily be drafted under civil law of other Member States with codified law systems. In fact, this allows for
extensive flexibility: regardless of the borrower's or investor's country of domicile, they may choose the
agreement to be construed under the law of one of their countries of domicile – or of a third country.
This is extremely favourable, in that the borders between different countries or economies do not
impede the market for Schuldscheindarlehen. The Schuldscheindarlehen concept is easily explained everywhere, and may bridge the gap between international investors and companies. Given the volumes involved and the favourable effect upon the economy, this market attracts significant cross-border interest.
The long-term objectives of European Capital Markets Union are highly relevant to the Schuldscheindarlehen concept, since they are conducive to its expansion. This applies both to the efficient design of
insolvency laws and the removal of tax-related burdens. A higher degree of harmonisation across Europe
concerning both these issues will lead to fairer cross-border competition, enhancing and simplifying offer
comparisons. Such moves would therefore directly benefit the freedom of capital movements. Accordingly, German public banks will put their focus on the work of the new expert group – appointed by the
EU Commission – on restructuring insolvency laws. The more compatible the rules are in the various
countries, the more willing companies will be to engage in international financial contracts.
Moreover, since Schuldscheindarlehen are a perfect match for the European Capital Markets Union concept
(as outlined in chapter 3 above), Capital Markets Union is also expected to provide further momentum on the
private placements markets. Certain member states have recognised the potential of this project. In a first step,
they have identified the burdens which currently impede implementation of a Capital Markets Union. Besides
the differences between national legislations and different currencies, different tax systems represent a particular
impediment. As businesses turn increasingly European each year, this will become a constantly growing burden.
Further obstacles include domestic credit lines (or those reserved for domestic borrowers), plus country-specific
products or structures which are mandatory under local law, but not compatible on a cross-border level. Currently, there are still numerous country-specific restrictions which are no longer adequate, and do not comply
with European law. Such restrictions should be abolished within the scope of Capital Markets Union.
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
15
Appendix: Best-practice case studies from public banks
Appendix: Best-practice case studies from
public banks3
3 All details regarding the best-practice case studies were provided by BayernLB, Helaba, LBBW, and NORD/LB, respectively. The issuers have
given their consent for publication.
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
17
Steinhoff Europe AG
€730 million Schuldscheindarlehen
Transaction details
Issuer
Steinhoff Europe AG
Financing instrument
Schuldscheindarlehen
Status
Senior unsecured
Use of funds
General corporate financing and refinancing of existing loans
Volume
€730 million
Terms
5, 7 and 10 years
Bookrunners
BayernLB, BNP Paribas, DZ BANK, RBI, Société Générale, Erste Group
Summary description
• Steinhoff Europe AG, based in Vienna, Austria, is a subsidiary of South Africa’s Steinhoff International
Holdings Ltd. The transaction was based solely on the group's European activities.
• Steinhoff Europe is one of the largest enterprises in the European furniture industry (no. 2 behind
IKEA), and a vertically integrated retailer for furniture and household goods.
• The issue met with very strong investor interest; when books closed, the placement volume was more
than three times oversubscribed. Accordingly, the final issue volume was increased significantly, from
€300 million to €650 million.
• The order book was highly granular, with more than 100 investors present. The issue was placed with
commercial banks (50 per cent), Landesbanken and savings banks (23 per cent each), and cooperative
banks (4 per cent).
Allocation by investor domicile
Source: BayernLB
18
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
Appendix: Best-practice case studies from public banks
voestalpine AG
€250 million Schuldscheindarlehen
Transaction details
Issuers
voestalpine AG, voestalpine Dienstleistungs- und Finanzierungs-GmbH,
Munich, and voestalpine Finanzierungs GmbH, Linz (Austria)
Guarantor
voestalpine AG (for financing vehicles)
Financing instrument
Schuldscheindarlehen
Status
Senior unsecured
Use of funds
General corporate financing
Volume
€250 million
Term 5 years
BookrunnerLBBW
Summary description
• To secure a successful placement (and to avoid excessive oversubscription), the arranging bank developed a highly customised marketing strategy, with a selected few new investors targeted in addition.
• The transaction allowed voestalpine to significantly reduce spreads whilst extending its maturity profile.
• The order book comprised a total of 37 investors, with tickets ranging from €500,000 to €50 million.
Allocation by investor domicile
Source: LBBW
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
19
Stadtwerke Düsseldorf AG,
€200 million Schuldscheindarlehen
Transaction details
Issuer
Stadtwerke Düsseldorf AG
Financing instrument
Schuldscheindarlehen
Status
Senior unsecured
Use of funds
General corporate financing
Volume
€200 million
Laufzeit
7, 10 and 12 years
Bookrunner
NORD/LB, Commerzbank, Helaba, ING Bank
Co-Manager
Sparkasse Düsseldorf
Summary description
• With revenues of €1.94 billion, Stadtwerke Düsseldorf AG ranks among the top ten local utilities in
Germany.
• The promissory note loan was issued as part of restructuring group liabilities.
• The objectives of the issue were to diversify the financing mix, to optimise the maturity structure, and
to reduce financing costs by redeeming existing liabilities.
• Despite the issue being massively oversubscribed, the issuer did not wish to increase the size. However,
the strong demand allowed to allocate significantly more than 50 per cent of the issue volume in the
10-year and 12-year tranches.
Allocation by Investor type
Source: NORD/LB
20
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
Appendix: Best-practice case studies from public banks
GERRY WEBER International AG
€140 million Schuldscheindarlehen
Transaction details
Issuer
GERRY WEBER International AG
Financing instrument
Schuldscheindarlehen
Use of funds
General corporate financing/acquisition financing
Volume
€140 million
Terms
5, 7 and 10 years
BookrunnerHelaba
Summary description
• The transaction was announced with a volume of €100 million and the option for an increased issue
size – given adequate demand – in the five-year and seven-year terms.
• The order book increased very quickly, to well over €400 million, across the different term tranches.
Given the very strong demand, it was possible to change the order book to "subject" status after just
one day.
• GERRY WEBER decided to increase the total issue size to €140 million, adding a ten-year tranche due
to strong demand, which also allowed spreads to be set at the lower end of the marketing range for each
tranche.
• With around 80 investors and approximately 100 orders, the order book was highly granular. In terms
of aggregate order volume, savings banks accounted for just under 60 per cent. The lion's share of the
transaction (~ 90 per cent) was placed in Germany, with additional investors coming from Luxembourg, Switzerland and Austria.
Allocation by investor domicile
Source: Helaba
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
21
Montana Tech Components GmbH
€90 million Schuldscheindarlehen
Transaction details
Issuer
Montana Tech Components GmbH (Austria)
Guarantor
Montana Tech Components AG (Switzerland)
Financing instrument
Schuldscheindarlehen
Use of funds
General corporate financing and refinancing of existing loans
Volume
€90 million
Terms
7 and 10 years
Bookrunners
BayernLB, Bank Austria, NORD/LB
Summary description
• Montana Tech Components Group is an international industrial conglomerate based in Menziken,
Switzerland. The company specialises in the high-potential sectors of intermediate energy storage and
metallurgy. The group employs some 4,100 staff at 55 locations in North America, Europe and Asia.
Its four operating divisions – Montana Energy Storage (VARTA), Montana Aerospace Components
(UAC and Alu Menziken), Montana Metal Tech (Alpine Metal Tech, Numtec Magnemag and Makra)
as well Montana Industrial Components (Aluflexpack Group) generated €79.9 million in EBITDA on
net sales of €525 million in the financial year 2014. The group commands leading market positions in
strongly growing markets, with established brands and renowned customers – supplemented by a 'buy
& build' growth strategy.
• In the transaction, seven-year and ten-year tranches were offered to a broad investor base. The order
book developed very favourably, in terms of volume and granularity. Thanks to good demand, the transaction was priced at the lower end of the ranges.
Allocation by investor domicile
Source: BayernLB
22
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
Appendix: Best-practice case studies from public banks
KOMSA Kommunikation Sachsen AG
€40 million Schuldscheindarlehen
Transaction details
Issuer
KOMSA Kommunikation Sachsen AG
Financing instrument
Schuldscheindarlehen
Status
Senior unsecured
Use of funds
General corporate financing
Volume
€40 million
Terms
4, 7 and 10 years
BookrunnerLBBW
Summary description
• Against the prevailing background of very favourable market conditions, KOMSA Kommunikation
Sachsen AG decided to refinance existing variable-rate Schuldscheindarlehen tranches early, in addition
to the refinancing of maturing loans, and to raise additional funds to finance growth.
• Besides a selection of relationship banks, further selected investors were invited to participate in the
transaction, in order to achieve the desired maturity mix.
• The transaction met with a very good investor response: KOMSA thus succeeded in allocating 60 per
cent of the transaction volume in maturities of seven years and beyond.
• Altogether, eleven investors took part in the transaction.
Allocation by type of investor
Source: LBBW
The Association of German Public Banks
(Bundesverband öffentlicher Banken Deutschlands e. V.– "VÖB")
23
Published by:
Bundesverband Öffentlicher
Banken Deutschlands, VÖB, e. V.
Lennéstraße 11, 10785 Berlin, Germany
Telephone +49 30 8192-263
Fax +49 30 8192-259
E-mail: [email protected]
Website: www.voeb.de
Edited by: Department Capital Markets
Produced by:
DCM Druck Center Meckenheim GmbH
Editorial deadline: 31 August 2015