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.