PRIIPS and the Debt Capital Markets; Practical Considerations for DCM Practitioners
Regulation (EU) No. 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) (the “PRIIPs Regulation”) entered into force on 29 December 2014. Its provisions will apply directly in all EEA Member States from 1 January 2018.
The PRIIPs Regulation introduces a pre-contractual disclosure regime (requiring publication of a Key Information Document or “KID”) for packaged retail and insurance-based investment products, with the aim of helping retail investors to understand and compare the key features and risks of PRIIPs.
This note considers the implications of the PRIIPs Regulation on the primary issuance of bonds and, in particular, steps that market participants may wish to consider to avoid inadvertently making issues available to EEA retail investors without a KID in breach of the PRIIPs Regulation.
Whilst market practice continues to evolve, the inclusion of selling restrictions and legends (in line with the suggested language developed by the International Capital Market Association) for MTN Programmes and standalone documentation will be one of a number of measures that issuers and underwriters may wish to consider now particularly in relation to programmes that will remain valid for issuance after 1 January 2018. This note summarises the alternative approaches available.