EC EUROBOND ISSUE REMAINS UNRESOLVED - DIPLOMATS
European Community diplomats said the
question of whether Eurobonds will fall under proposed EC rules
requiring new securities issues in Community countries to be
preceded by a prospectus has yet to be resolved.
    The U.K. Securities industry has been lobbying hard against
an EC Commission proposal, aimed at protecting investors, that
would require publication and approval of a prospectus before
all public offers of securities.
    The proposed directive currently includes Eurobonds,
although it makes an exception to the prospectus rules for
issues directed exclusively at professional investors.
    Diplomats said that with Britain tending towards backing
West Germany and Luxembourg in their opposition to the
inclusion of Eurobonds, the question of whether they would
remain within the scope of the directive or not was wide open.
    "Everything is in the melting pot," said one diplomat who
declined to be named.
    The diplomats said Belgium has now given up attempts to
have the directive adopted by EC ministers before it hands over
the presidency of the 12-nation Community to Denmark on July 1.
It was not immediately clear what priority the Danes would
attach to getting the proposals through during their six month
tenure.
    Meanwhile, discussions on the directive at working group
level have halted, diplomats said.
    Officials of the EC Commission said it recognised that its
proposals created a conflict between the need for greater
protection of investors, on the one hand, and for banks and
other institutions to place Eurobonds quickly, on the other.
    "It's a problem and we are still in the grips of internal
debate as to the right line to take," said one Commission
official. Eurobonds were not included in the original draft
directive, first put forward in 1981, but were brought into its
scope later at the request of a number of EC member states.
    Diplomats said countries that oppose the inclusion of
Eurobonds in the proposals are worried that the prospectus
requirements would prevent the thriving Eurobond market from
functioning as well as it does now.
    "With timing so essential to the market for placing and
distribution, there's just not time to deal with these
bureaucratic hurdles," said one.
    He and others said the overriding concern was that the
requirements could drive the Eurobond market out of traditional
EC centres like London and Luxembourg to Switzerland, the U.S.
Or Japan.
    Diplomats said the Eurobond question is not the only issue
that needs to be resolved before the directive can be passed.
    They said West Germany's main objection to the directive in
its present form is that it considers as too stringent proposed
rules laying down how much information companies issuing
non-listed securities should disclose in their prospectuses.
    The proposed rules create problems for West Germany because
its new second tier securities market has less demanding
requirements that would have to be tightened.
 REUTER
