SWISS AGREE ON NEW PROSPECTUS RULES FOR NOTES
Swiss franc notes issued after May 1 must
be provided with a prospectus, virtually erasing the difference
in information requirements between notes and public bonds,
according to a convention drafted by the Bankers' Federation.
    The convention requires that lead managers draw up a
prospectus naming all syndicate members and providing certain
details about the borrower.
    In contrast to public issues, though, the prospectus must
merely be made available to clients on request via all
syndicate banks rather than published and distributed in
printed form.
    The convention, which was approved by banks earlier this
month, replaces an earlier convention dating from 1984 and
deals with what had been widely seen as an increasingly
anachronistic distinction between notes and public issues.
    Its publication follows a long debate among bankers on the
amount of information that should be provided by borrowers,
heightened by difficulties with Swiss franc issues here on
recent occasions .
    It applies to all notes in units of at least 50,000 Swiss
francs, the usual denomination, which are placed directly with
customers by the syndicate and not quoted on the bourse.
    Anything smaller than 50,000 francs will be governed by the
unchanged, more demanding rules that apply to public issues.
    Bankers contacted by Reuters said they did not envisage
that the new requirement would present them with problems or
push up fees. Many banks said that they had for some time been
providing more than the legal minimum of information.
    Traditionally, notes or private placements, as they were
also known, were medium term instruments denominated in 50,000
francs and placed largely with institutional investors.
    They were normally not brought onto the open market and
never quoted on the stock exchange.
    But over the years the distinction between notes and the
publicly quoted and traded bonds gradually broke down. The
National Bank therefore last May abolished all remaining
restrictions on maturities and denominations which still
formally divided them.
    However, it was not in the competence of the National Bank
to rule on prospectuses and banks have since continued largely
as before: public issues, generally quoted on stock exchanges,
have been provided with detailed prospectuses, while notes,
virtually always not-quoted, have been equipped only with
"information memorandums" with varying degrees of detail.
    The new convention attempts to put an end to this. It says
each notes prospectus must contain the following seven points:
    - The precise terms of the issue
    - Details of the company performance if it is more than six
months since the last annual report
    - Naming of all guarantors
    - The source of the information
    - Details of ratings, insofar as they have been made
    - For equity linked notes, details of where the company's
shares are listed and price high and lows over at least the
last three years.
    - That the lead manager has required the borrower to
provide information during the lifetime of the notes on the
progress of his business.
     According to figures from Swiss Bank Corp, total note
issues by foreign borrowers reached 18.6 billion Swiss francs
last year, compared with 23.6 billion francs borrowed in the
form of public bonds.
    A majority of the note issues were for Japanese borrowers.
 REUTER
