ENSafrica ENSight | 14 March 2018

JSE Debt Listings Requirements: project bonds

by Eric le Grange and Stephen von Schirnding

Following an extensive consultation process over a two-year period with relevant stakeholders in the project finance market, the South African Registrar of Securities Services (the “Registrar”) has announced that the Johannesburg Stock Exchange (“JSE”) Debt Listings Requirements (“DLRs”) have been amended with effect from 1 March 2018 to include a new section 10, which will now specifically cater for so-called “project bonds”.  

“Project bonds” are defined as “bonds that are financed by the cash flows of a ring-fenced development project (for example, infrastructure or renewable energy projects)”. 

A key concern raised by project bond issuers during the consultation process related to their inability to comply with certain provisions of the DLRs, in particular, in relation to the disclosure of sensitive information to the public and complying with certain of the financial reporting requirements contained in the DLRs. These and other concerns are addressed in the new section 10, but time will tell to what extent market participants embrace these new DLRs, thereby making the debt capital markets more accessible to this market than is currently the case.   

Key features of section 10 include:

  • project bond issuers issuing project bonds in terms of section 10 may only issue project bonds to entities falling within a specified and closed list of “project bond investors”, ranging from insurers, banks, pension funds, the Government Employees Pension Fund and the Public Investment Corporation to international institutions such as the World Bank, the International Monetary Fund, the European Central Bank and the International Finance Corporation. As we understand, the main reason for this amendment is to address the concern that information about a project bond issuer should not be available to any member of the public or “non-professional investor” and to limit the risk of information falling into the hands of competitors who are not actual investors;
  • provision is made for project bond issuers to utilise a virtual data room (“VDR”) to disclose certain confidential information that they prefer not to disclose on a website. VDRs will be operated by JSE-approved VDR providers, a list of which will be published on the JSE’s website;
  • project bond issuers must make available all legal agreements relating to the cash flow earned on the project (for example, off-take agreements; operation and maintenance agreements; engineering, procurement and construction contracts; and tariff agreements) and certain other relevant documentation and information relating to the project, all of which must be made available on the project bond issuer’s website or the VDR, as the case may be; and
  • project bond issuers that are unable to comply with certain of the existing financial reporting requirements contained in paragraph 5.3 of the DLRs (such as the requirement to submit financial statements for the last three financial years) may be exempted from complying with paragraph 5.3, provided that either an audited consolidated cash-flow model on the project or a profit forecast of the project bond issuer for the remainder of the financial year during which it will list the first debt security and for one full financial year thereafter, is provided to the JSE.

The Registrar’s announcement is available here and a copy of the amendments is available here.

For more information or assistance, please contact:

 

Eric le Grange

project development, project finance and oil & gas | director
elegrange@ENSafrica.com
cell: +27 83 644 6909

add to Outlook contacts

print

 

Stephen von Schirnding

banking and finance | director
svschirn@ENSafrica.com
cell: +27 82 708 0106

add to Outlook contacts

print



No information provided herein may in any way be construed as legal advice from ENSafrica and/or any of its personnel. Professional advice must be sought from ENSafrica before any action is taken based on the information provided herein, and consent must be obtained from ENSafrica before the information provided herein is reproduced in any way. ENSafrica disclaims any responsibility for positions taken without due consultation and/or information reproduced without due consent, and no person shall have any claim of any nature whatsoever arising out of, or in connection with, the information provided herein against ENSafrica and/or any of its personnel. Any values, such as currency (and their indicators), and/or dates provided herein are indicative and for information purposes only, and ENSafrica does not warrant the correctness, completeness or accuracy of the information provided herein in any way.

 

feedback

Please fill in the form below to send us any queries, requests, feedback, suggestions - we'd love to hear from you:
 *
 *
 *
 *
 

 

latest news

ENSafrica newsflash
25 Apr 2018
ENSafrica newsflash

TMT ENSight
25 Apr 2018
Websites and apps: compliance aspects to consider

TMT ENSight
25 Apr 2018
Social media: speaking out vs speaking up

ENSafrica tax revenews edition 3
24 Apr 2018
ENSafrica tax revenews edition 3

Africa Business in Brief
23 Apr 2018
Africa Business in Brief Issue: 252

click for all articles

 

our awards

African Legal Awards Chambers and Partners Rankings DealMakers Awards Global Competition Review 100 (GCR100) Rankings IAM Patent 1000 Rankings IFLR1000 Rankings International Tax Review (ITR) Rankings Legal 500 Rankings Managing Intellectual Property (MIP) Rankings World Trademark Review 1000 (WTR 1000) Rankings
info@ENSafrica.com | level 2 BBBEE rating (South Africa)