An ECPP is a medium or long-term primarily unlisted debt financing transaction between a listed or unlisted company and a small number of institutional investors, based on deal-specific documentation negotiated between the borrower and the investors, generally but not necessarily with the participation of one or more bank intermediaries as arranger(s) acting in an agency capacity (i.e. not underwritten by the arranger(s)).

Negotiation of contractual terms and conditions by the borrower and the investor is indeed a key feature of an ECPP, distinguishing an ECPP from public and syndicated bond issues, such as Eurobond issues where investors subscribe to an issue without usually being involved in the negotiation of the terms and conditions. The negotiation of ECPP terms and conditions therefore more closely resembles the negotiation process and contractual terms seen in the bank loan market. An ECPP may take contractually the form of a loan or a note/bond (please see Documentation).

The ECPP market is designed to particularly benefit medium-sized and unrated companies by providing long-term debt funding which may not otherwise be available to them from the loan or bond markets. It may serve in this way as an intermediary and preparatory stage for these companies before they gain access to the public debt markets. The ECPP market can also accommodate larger corporate issuers, as the case may be. The market is aimed at institutional investors with a buy-to-hold strategy, and not at the retail market.

The ECPP should therefore not be confused with forms of public (listed) debt market financing that have other characteristics and/or target issuers, but that may also be “privately placed” to individual or small groups of institutional investors as in the case for example of reverse enquiry Euro Medium Term Note (EMTN) transactions.
ICMA Zurich

T: +41 44 363 4222
Dreikönigstrasse 8
8002 Zurich
ICMA London

T: +44 20 7213 0310
110 Cannon Street
London EC4N 6EU
ICMA Paris

T: +33 1 70 17 64 72
62 rue la Boétie
75008 Paris
ICMA Hong Kong

T: +852 2531 6592
Unit 3603, Tower 2
Lippo Centre
89 Queensway, Admiralty
Hong Kong
 
Copyright © 2021 International Capital Market Association.