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Prior to the legislative reforms, limits on the amount of bond issues by a public limited company, the syndicate of bondholders and trustee requirements, and the mandatory public deed of issue (which the Commercial Registry had to assess prior to disbursement of the bonds) were often-cited legal arguments as to why it was better to issue project bonds outside Spain. These obstacles are now a thing of the past.

The structuring of these transactions has been simplified and it is no longer necessary to incorporate an issuer in another jurisdiction. Significant cost savings are also involved, which is a relevant factor in medium-size issues, and timelines have been sped up. Moreover, where the issue finances or refinances one or more projects located in Spain and the guarantees for the issues must be granted under Spanish law to be effective, issuers can now enjoy the safety and simplicity of operating in a single jurisdiction.

In the case of a standalone project, the Spanish company holding the concession or the administrative permit and, therefore, the assets and cash flows of the project, can issue the bonds itself and offer the main guarantees with the utmost legal certainty. Also in the case of concessions, the new Public Sector Contracts Law retains the favorable legal treatment for bond or debenture issues carried out by concession holders, subject only to the simple requirement to subsequently inform the contracting authority.

All this will facilitate the placement of these bonds among investors. Moreover, since all documentation will be governed in the same jurisdiction, investors will better understand the risks associated with the project.

An issue from a Spanish vehicle therefore offers certain advantages, both for sponsoring companies and issuers, as well as for arranger banks, underwriters and investors.

Advantages of listing issues on the MARF

Both the regulatory bodies and the Spanish government have taken strides to shore up the Spanish financial sector, including the promotion of the Alternative Fixed-Income Market (MARF, for its Spanish acronym). The MARF is a multilateral trading facility similar to other European platforms, and is considered a success story by the European Commission Expert Group on Corporate Bonds in its recent report of November 2017.

Among other advantages, listing issues on the MARF allows for the following: flexibility and proximity of the exchange’s governing body, which allows documents to be submitted in English, in international format, and admits bonds governed by English law or other national law that could be preferred by Spanish investors; as the MARF targets qualified investors, its circulars offer a great deal of flexibility and autonomy in terms of the information to be provided to investors, based on the related requirements (base cases, compliance confirmations, etc.); and, in contrast to other European platforms, the issuer’s information and documentation requirements are adapted to the nature of a Spanish issuer (thereby avoiding the translations and legal opinions that could be required on other platforms). In our experience and from a legal and timeline-management standpoint, listing an issue on the MARF is not only comparable to doing so on other European markets, but also more efficient.

All this is currently in place and available. A number of project bond issues have been launched by Spanish issuers, both in other foreign markets and in MARF, for solar energy, roadway infrastructure and hotel projects, passive telecommunications facilities and waste management concession projects, among others. The issue carried out by the La Plata motorway (A-66) concession holder is the highest-volume issue to date. While in certain aspects these issues are governed by English law, for the most part they are subject to Spanish law.

This trend falls within a general movement in which Spanish groups are more likely to issue their corporate bonds from Spanish companies.

When deciding whether to use the form of a project bond for their issues, decision-makers must compare these bonds with other financing alternatives. This includes carefully looking at financing conditions, the required due diligence and administrative authorizations, covenants and their degree of flexibility, timelines and execution of the process and, where applicable, coordination with existing financing. Thanks to the new developments in Spanish legislation and in our securities markets, when comparing jurisdictions, the Spanish market now offers very attractive solutions in terms of simplicity, security, costs and timing.