Moriah Law LLC has advised private market exchange ADDX in establishing a Multi-Issuer Debt Issuance Programme (MIDIP) for companies to issue digitised commercial paper and bonds on ADDX FI, ADDX’s dedicated segment for commercial paper and bonds.
The inaugural offering under the MIDIP closed on 2 April this year for S$10 million, 6 per cent per annum, five-month unsecured commercial paper issued by LHN, a real estate services company incorporated in Singapore and listed on the Singapore Exchange Securities Trading Limited and the Hong Kong Stock Exchange.
With orders totalling S$17.161 million, LHN’s initial offering of S$5 million was oversubscribed by 343%. The resultant upsized S$10 million was the maximum amount authorised by its board. The transaction marked LHN’s successful entry into the debt capital markets.
The innovative programme streamlines the issuance process, uniquely allowing different issuers to utilise umbrella terms to access alternative debt funding efficiently and reliably. Issuers may come to market in a matter of days and issue fairly-priced commercial paper and bonds on ADDX FI, without incurring the time and costs usually associated with establishing an independent medium term note or debt issuance programme. With the MIDIP, issuers may expect savings of up to 90% or more in issuance costs.
Issuers have the flexibility to specify currencies, denominations, fixed or floating coupon rates, tenors and other commercial terms using the MIDIP’s on-off, easy-fill format. It can accommodate a spectrum of debt products, including green and sustainable bonds, which increasingly capture the interest of market participants. Small and mid-cap companies listed on reputable stock exchanges are expected to benefit most, for they can tap the market quickly and cost-effectively to expand operations and seize new opportunities without the need to prepare extensive business disclosures and offering documents.
Market participants additionally benefit from the efficiencies of bond digitisation and shortened settlement periods with ADDX’s permissioned blockchain technology. Manual, time-consuming processes are reduced while enhancing security, eliminating the need for traditional intermediaries and services and giving rise to considerable cost savings for issuers and investors.
Mabel Tay, Managing Director of Moriah Law LLC, observes, “Historically, the debt capital markets have offered compelling opportunities for companies seeking funding. It’s not uncommon for issuers, including unrated and debut issuers, to secure financing at pricing lower than traditional bank loans. Issuers may even find it strategically advantageous to access the markets at wider spreads than their existing lender financing, given the flexibility this offers in comparison to bank loans, which often entail security packages and onerous maintenance covenants. Issuers do well by fostering mutually rewarding relationships with non-traditional lenders, such as high-net-worth individuals, asset managers, family offices, and private funds, diversifying their funding sources and opening doors to new opportunities. The MIDIP makes it much easier for issuers to access these benefits.”
The MIDIP documentation is formulated for a variety of regional and global issuers and includes a toggle for Singapore governing law or English governing law, maximising the investor outreach opportunity. Moriah Law LLC and Mishcon de Reya LLP acted for ADDX on the establishment of the MIDIP in respect of Singapore law and English law, respectively. Moriah Law LLC acted for ADDX in respect of the inaugural issuance.
Background
Moriah Law LLC is a Singapore law firm that regularly advises on capital raising, mergers and acquisitions, joint ventures, bank financings, corporate and debt restructurings and other transactional corporate and commercial matters.
The firm specialises in capital markets and debt restructuring transactions involving an extensive range of debt, equity and equity-linked products, including investment grade and high yield debt, convertible and exchangeable bonds, regulatory and other hybrid capital, securitised derivatives, other structured products and collective investment schemes.
Moriah Law’s strong interdisciplinary expertise extends to the areas of technology (particularly FinTech), digitisation, blockchain and DLT, DeFi, and cryptographic assets such as security tokens, utility tokens, fiat-backed and algorithmic stablecoins and other digital currencies.
