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Capital Markets

Primary markets: Poor summer prospects for new issues

Issuers are uncertain about the implications of the EU Prospectus Directive

An excellent June for supply of new issues was not purely a European phenomenom. Issuers on both sides of the Atlantic joined in the fun last month. Conditions are firm and there appear to be few reasons why supply should slow. But according to the vast majority of European syndicate managers famine might soon follow feast. They fear the upcoming introduction of the EU Prospectus Directive on July 1 was a reason why opportunistic issuers stirred from their torpor during May and June and that this supply might well dry up until the dust settles on the new regulations. The directive affects most public offerings of securities that trade on a regulated market.

It requires exacting levels of continuing disclosure, and new documentation even for recently updated MTN programmes.

There is a high level of ignorance about the new rulings among borrowers. At last month's Euromoney Global Borrowers & Investors Forum, only 5% of the audience at one seminar (three-quarters of whom were issuers) were able to claim to be well informed about the directive.

Cliff Dammers, until recently secretary general of the newly merged International Primary Market Association, says: "I think we are in wait-and-see mode.

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