Ashurst Quarterly Debt Capital Markets Update Q1 2025

Welcome to the second edition of the Ashurst Quarterly Debt Capital Markets Update for 2025. In this edition we summarise the key developments in debt capital markets in the first quarter of 2025.

We have a number of different developments to report on in this edition:

• CJEU preliminary ruling on meaning of "transferable securities"
• ICMSA publishes revised standard provisions for meetings of bondholders
• FCA consultation on facilitating retail offers and issuance of low-denomination bonds
• FCA consultation on Public Offer Platforms
• UK implementation plan for T+1 settlement
• ESMA consultation on guidelines for supplements seeking to introduce new securities to a base prospectus
• Commission proposes amendments to sustainability reporting and due diligence
• ESMA announces delays to Listing Act mandates
• UK government policy paper on digital government debt securities (DIGIT)
• Commission consultation on follow-on prospectuses

CJEU preliminary ruling on meaning of "transferable securities"

In a significant preliminary ruling delivered on 9 January 2025 the Court of Justice of the European Union (CJEU) issued its preliminary ruling confirming the opinion delivered on 5 September 2024 by the Advocate General of the CJEU.  This opinion concluded that Article 2(1)(a) of the Prospectus Directive must be interpreted as meaning that the concept of "transferable security negotiable on the capital market" covers the shares of a holding company which can be held only by provinces and municipalities and whose transfer is subject to the approval of the board of directors, provided that those restrictions do not make the negotiability of those shares on the capital market impossible or extremely difficult.  This means that an invitation to subscribe to such shares would be subject to the obligation to publish a prospectus, laid down in Article 3(1) of the Prospectus Directive (unless an exception to the requirement to publish a prospectus under the Prospectus Directive applies). Given that the concept of "transferable security negotiable on the capital market" is effectively carried forward into the EU (and UK) Prospectus Regulation, this ruling will likely have similar significance for the interpretation of these Regulations.

ICMSA publishes revised standard provisions for meetings of bondholders

On 24 January 2025, ICMSA published a newly revised version of its pro forma set of standard provisions for meetings of bondholders.  This latest revision is designed to provide  enhanced provisions related to electronic consents that permit resolutions to be passed by way of electronic consents without the need to hold actual meetings. Typically, electronic consents provisions have required higher threshold requirements for a resolution to be passed, resulting in bondholder meetings being preferred by issuers in certain circumstances. Therefore, ICMSA has proposed enhanced electronic consent wording to eliminate the difference in these thresholds.

FCA consultation on facilitating retail offers and issuance of low-denomination bonds

On 31 January 2025, the FCA published a consultation paper (CP25/2) on further changes it proposes to the public offers and admissions to trading regime and to the UK Listing Rules (UKLR). This follows on from the consultation paper (CP24/12) published in July 2024 on the new prospectus rules the FCA proposes to make under the Public Offers and Admissions to Trading Regulations 2024 (the POATRs).

These proposed new rules, together with the POATRs, will effectively replace the current UK Prospectus Regulation regime. In our July 2024 briefing, we highlighted the principal changes that the proposed new rules will make to the format and contents of prospectuses and the circumstances in which they are used for issues of non-equity securities.  For a discussion of how the FCA's latest proposals will affect non-equity securities and in particular low denomination securities and the accessibility of corporate bonds to retail investors see this Ashurst briefing.

FCA consultation on Public Offer Platforms

On 31 January 2025, the FCA published a consultation paper (CP25/3) on further proposals to support the implementation and operation of the new Public Offer Platforms (POPs) regime.  This follows on from the consultation papers (CP24/12 and CP24/13) published in July 2024 on the new prospectus rules the FCA proposes to make under the POATRs which will govern POPs.  This latest POP consultation focuses on proposals to amend the FCA Handbook to cover redress-related proposals, proposed fees and reporting requirements for firms operating a POP, as well as amendments to the Perimeter Guidance manual (PERG).  This consultation also sets out the FCA's proposed approach to authorising and supervising firms carrying on the new regulated activity of operating a POP.

UK implementation plan for T+1 settlement

On 6 February 2025, the UK's Accelerated Settlement Technical Group (ASTG) published its implementation plan for the first day of trading for T+1 settlement in the UK.  In the implementation plan, the ASTG recommends that the first day of UK cash securities trading for settlement on a T+1 cycle should be 11 October 2027 and that this date should be set through amendments to the UK Central Securities Depositories Regulation. This date aligns with the timing proposed by ESMA for the EU in its November 2024 report on shortening the settlement cycle.  On 19 February 2025 the government published its response to this report in which it accepts all of the recommendations made to it and says it will legislate to make T+1 the standard settlement cycle in the UK from 11 October 2027.

ESMA consultation on guidelines for supplements seeking to introduce new securities to a base prospectus

On 18 February 2025, ESMA published a consultation paper (ESMA32-1953674026-5808) concerning its proposed draft guidelines on supplements which introduce new securities to a base prospectus approved under the EU Prospectus Regulation.  This consultation closes on 19 May 2025 and ESMA says it will aim to publish final guidelines in Q4 2025 to take effect two months later.  For more information, see this Ashurst briefing.

Commission proposes amendments to sustainability reporting and due diligence

On 26 February 2025, the European Commission proposed an Omnibus package on sustainability reporting and due diligence which, amongst other things, contains a Directive that would delay application of the Corporate Sustainability Reporting Directive (EU) 2022/2464) (CSRD) and the Corporate Sustainability Due Diligence Directive (EU 2024/1760) (CSDDD). It proposes a two-year postponement of sustainability reporting requirements for all companies that are required to comply from financial year 2025 or 2026 depending on size. It also proposes postponing transposition and application of the CSDDD for the first group of in-scope companies by one year.  The Commission proposals can be found here and here.  On 26 March 2025, the Council of the EU agreed to this proposal. 

ESMA announces delays to Listing Act mandates

By a letter dated 3 March 2025 from the Chair of ESMA to the Commission, ESMA notified the Commission that in view of its demanding work programme for 2025 it would have to de-prioritise a number of its mandates.  Among these are the mandates requiring ESMA to develop draft implementing technical standards to specify the template and layout of prospectuses and prospectus summaries which ESMA had planned to deliver by 14 November 2025 but which it now says will be delayed until at least November 2026.  In view of this, it remains to be seen how competent authorities will interpret the corresponding new provisions of the EU Prospectus Regulation when they start to apply in June 2026.

UK government policy paper on digital government debt securities (DIGIT)

On 18 March 2025, HM Treasury and the UK Debt Management Office (DMO) published a policy paper seeking market participants' views on the UK government's pilot Digital Gilt Instrument, to be known as "DIGIT".  DIGIT will be a new, short-dated, transferable security held on a DLT platform, issued within the Digital Securities Sandbox and will be independent of the government’s standard debt issuance processes. The policy paper says the government intends to announce details of selected service suppliers in late summer 2025.

Commission consultation on follow-on prospectuses

On 18 March 2025, the European Commission published a targeted consultation on the reduced content and the standardised format and sequence of the EU follow-on prospectus and the EU growth issuance prospectus .  These new forms of prospectuses are introduced into the EU Prospectus Regulation regime by the Listing Act package of amendments which, amongst other things, require the Commission to adopt delegated acts specifying their reduced content requirements.  

This 8-page document consists essentially of a series of questions asking market participants' views on the appropriate level of disclosure in these prospectuses.  One of these questions makes clear the Commission's view that an EU follow-on prospectus has the potential to be used as a base prospectus for an issuer which has had any securities admitted to trading on a regulated market continuously for at least the 18 months preceding the date of the base prospectus.