NEW GUIDELINES FROM THE GERMAN BUNDESBANK ON THE ISSUE OF DM‐DENOMINATED BONDS
| Published date | 01 January 1992 |
| DOI | https://doi.org/10.1108/eb024748 |
| Pages | 29-33 |
| Date | 01 January 1992 |
| Author | DANIELA WEBER‐REY |
| Subject Matter | Accounting & finance |
NEW GUIDELINES FROM THE GERMAN BUNDESBANK ON
THE ISSUE OF DM-DENOMINATED BONDS
Received: 26th October, 1992.
DANIELA WEBER-REY
DANIELA WEBER-REY
IS
A PARTNER IN THE LAW FIRM PÜNDER,
VOLHARD, WEBER & AXSTER AND IS BASED IN
FRANKFURT AM MAIN.
ABSTRACT
The paper
considers
the regulatory frame-
work for the issue of
DM-denominated
bonds and, in particular, the extent to
which
the Bundesbank
Statement,
effective
from 1st August, 1992, will
liberalise
the
German capital market. The
paper
fore-
warns of
the implications
of
the
applica-
tion of
the German
Standard
Contracts Act
to
DM-denominated
bond
issues aimed
at
German domestic
investors.
BACKGROUND
On 3rd July, 1992, the German Cen-
tral Bank (Bundesbank) announced
fundamental changes to its policy on
issues of DM-denominated Bonds.
The Statement from the Bundesbank
concerning Deutsche Mark Issues,
which became effective as of 1st
August, 1992, contains guidelines
which set the stage for the German
capital market to meet the require-
ments of the Single European Mar-
ket and to play a more competitive
role internationally. The new State-
ment came as a surprise to the
German banking community. Its
major impact will be the liberalisa-
tion of the restrictions on short-term
DM-bond issues and the improve-
ment of conditions for longer term
issues.
Under the previous guidelines,
issued in 1985 and 1989, the Bundes-
bank insisted upon all DM-denomi-
nated bond issues being firmly
rooted in Germany, by requiring a
German incorporated lead manager,
a German principal paying agent, a
German listing, incorporation in the
German securities clearing system
and the application of German law
and consequently, these restrictions,
did not render the market particu-
larly attractive to a foreign issuer. In
addition, although in 1989 the mini-
mum maturity period for DM-bonds
was reduced to two years (previously
five years for public offers and three
29
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