Trésorier/Treasurer magazine - N°98 - July/Aug/Sep 2017 - 39

NEWS

EACT supports standardisation of documentation but
strongly opposes standardisation of issuance conditions, sizes, maturity dates or similar. Harmonization
would dramatically reduce corporates' flexibility to fund
when required in line with their business needs and
cash flow cycles. Issuance window opportunities are
already limited due various factors ("closed periods"
before results announcements, market "holidays" e.g.
August in Europe, availability of internal resource, time
taken to prepare issues etc.) and cannot be further limited. Standardizing issuance timing or size could prove
very counterproductive by creating liquidity problems
for issuing corporates and by impacting pricing competitiveness. Underlying business flows can take place on
any day of the year and are variable in volume, therefore
standardizing will impair companies' ability to match
bond issuance with their funding needs. Moreover, standardization might in effect lead to worsened liquidity
and saturation of the market if issuers are forced to
issue on same dates.

- JULY
N°98

quidity issues in the primary issuance market. There are
mixed views as to whether secondary market liquidity
has in fact deteriorated but even if secondary market
activity is thin at times, this has generally not impacted
corporates' ability to understand pricing dynamics and
issue in size if necessary.

The EACT (European Association of Corporate Treasurers 13.000 members across Europe) welcomes
the opportunity to respond to this consultation. It is
supportive of the Capital Markets Union (CMU) initiative
and support the Commission's agenda for jobs and
growth. The CMU project can deliver concrete benefits
to non-financial companies by creating a well-functioning single market for capital and ensure diversified
funding sources. Its first comment relates to the ongoing Commission review EU corporate bond markets.
EACT supports and understands the need to analyze
more in-depth the functioning and possible problems in
this market. It would however caution that any practical
solution for improving the functioning of the corporate
bond market should not in effect lead to worsened
conditions for corporate bond issuers. This holds particularly true with regard to the push by certain market
participants for further harmonization of issuance.
Whilst harmonisation may bring benefits to certain market participants, EACT members are against any developments that would make bond issuance disconnected
from issuers' underlying funding requirements, which
are not susceptible to harmonisation. Such developments would go completely against the very objectives
of CMU of diversifying companies' funding sources
and facilitating capital market access and would make
funding by capital markets more inflexible, possibly
deterring issuance. In general the current situation with
market liquidity is not a major source of concern for corporates. Typically corporates have not experienced li-

LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE

responded to the EU
Commission's consultation
on CMU mid-term review
in March 2017

/ AUG / SEP 2017

- EACT

Trésorier/Treasurer magazine - N°98 - July/Aug/Sep 2017

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