{"id":12908,"date":"2022-08-11T21:35:38","date_gmt":"2022-08-11T21:35:38","guid":{"rendered":"http:\/\/legalblog.ie\/?p=12908"},"modified":"2024-02-13T21:12:31","modified_gmt":"2024-02-13T21:12:31","slug":"short-term-debt","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/short-term-debt\/","title":{"rendered":"Short Term Debt"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/short-term-debt\/#Shorter_Variants\" title=\"Shorter Variants\">Shorter Variants<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/short-term-debt\/#Issuance\" title=\"Issuance\">Issuance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/short-term-debt\/#Certificates_of_Deposits\" title=\"Certificates of Deposits\">Certificates of Deposits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/short-term-debt\/#Commercial_Paper\" title=\"Commercial Paper\">Commercial Paper<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/short-term-debt\/#Medium_Term_Notes\" title=\"Medium Term Notes\">Medium Term Notes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/short-term-debt\/#Acceptance_Credits\" title=\"Acceptance Credits\">Acceptance Credits<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Shorter_Variants\"><\/span>Shorter Variants<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The following are debt instruments with shorter maturities, generally, than bonds.<\/p>\n<ul>\n<li>commercial paper<\/li>\n<li>certificates of deposit,<\/li>\n<li>medium-term notes,<\/li>\n<li>acceptance credits.<\/li>\n<\/ul>\n<p>Each is a bearer security negotiable by delivery.\u00a0 They are all debentures or acknowledgements of indebtedness in a wider sense.<\/p>\n<p>Acceptance credit facilities may provide short-term finance through the acceptance of eligible bills.\u00a0 Bills are bills of exchange.\u00a0 Acceptance credit facilities may be provided by institutions whose acceptances are approved by as eligible for use in monetary operations.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Issuance\"><\/span>Issuance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Debt may be redeemed by new debt issues on a rolling basis.\u00a0 Investors will not generally have obligations to take on new debt issues.\u00a0 An issuer may have a standby credit facility on which it can draw in the event that it cannot place its issues on the debt market.<\/p>\n<p>A committed program of debt issuance is one that is underwritten.\u00a0 An underwriter is obliged to take up the new issue. A committed program is costly and carries risks for the underwriters.<\/p>\n<p>Medium-term notes may be traded on stock exchanges. As with bonds, a prospectus is required.<\/p>\n<p>Commercial paper, certificates of deposit, and banker acceptances may be issued in dematerialized form.\u00a0 They may be settled through CREST and equivalent providers.<\/p>\n<p>Issuers may enter placing agreements to place or use best endeavours to place the issued securities with investors.\u00a0 Securities may only be offered to the public when an approved prospectus has been made available or is alternatively exempt.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Certificates_of_Deposits\"><\/span>Certificates of Deposits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Certificates of deposits are issued by credit institutions which accept deposits.\u00a0Certificates of deposit are basic instruments evidencing a deposit.<\/p>\n<p>The deposit is repayable to the bearer of the certificate on a stated date. Where interest is payable, in the case of paper form certificates, it is presented, and payment is noted on the certificate.\u00a0 Interest may be fixed or floating.\u00a0 Fixed rates are generally annual.\u00a0 Floating rates are three to six months.<\/p>\n<p>Institutions which accept deposits and issue CDs must be authorized as deposit taking institutions. Certificates of deposit may be in any currency.\u00a0 Maturities may be up to five years, and longer terms are possible.<\/p>\n<p>Minimum denominations are generally \u00a3100,000 or equivalent in foreign currency in London rules.\u00a0 Put and call options may be provided for.\u00a0 A guarantee may be provided for with a guarantor by a regulated institution.<\/p>\n<p>A prospectus is not usually prepared for CDs.\u00a0 They may be offered under an exempt offer below the threshold. The CD is regulated in the same way as a banking deposit.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Commercial_Paper\"><\/span>Commercial Paper<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Commercial paper is a promise to pay the bearer the stated amount on the stated day.\u00a0 Payments are made gross without deduction of tax.\u00a0 The governing law and jurisdiction are provided for.\u00a0 \u00a0Commercial paper may be issued at a discount with the return implied by a discounted face value.<\/p>\n<p>Commercial paper is generally issued by high-grade borrowers.\u00a0 It is based on covenant alone without credit support or security. Where it is securitized, collateral and security enhancements may be provided.<\/p>\n<p>Medium-term notes are also issued by high-grade entities.\u00a0 They may be guaranteed and\/or secured.<\/p>\n<p>Commercial paper may be in bearer negotiable form or dematerialized form settled through CREST.\u00a0 Eligible debt security forms entail a deed exercised in a pro forma CD form.\u00a0 The deed sets out the terms of issues.\u00a0\u00a0 A notice of issue is made, which sets out the terms of the particular issue.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Medium_Term_Notes\"><\/span>Medium Term Notes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Medium-term notes have a maturity of a year or more.\u00a0 Below that, they are deemed commercial paper.\u00a0 Maturities may be up to five years and, in some cases, longer.<\/p>\n<p>Medium-term notes are broadly similar to bonds.\u00a0 They promise to pay a specific amount together with coupons for interest payments.\u00a0 They are often negotiable instruments transferable by delivery, being bearer instruments.<\/p>\n<p>Provision is made for payment of interest without deduction. Events of default and other restrictions are defined.\u00a0 The governing law and jurisdiction are provided for.\u00a0 \u00a0They may not be offered to the public unless exempt or with a prospectus.\u00a0 They are generally offered to qualified investors.<\/p>\n<p>Medium-term notes may be issued on a committed or uncommitted basis.\u00a0 They may be placed with investors.\u00a0 They may be part of an issue over a period of time. They may be issued under a global deed of covenant.\u00a0 \u00a0The terms of the issue may be standardized so as to reduce documentation on later issues.\u00a0 They may be held through clearing systems.<\/p>\n<p>Medium-term notes may be listed on a stock exchange.\u00a0 A prospectus may be required.\u00a0 There may be a base prospectus with information about the issuer supplemented by supplementary prospectuses for new issues.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Acceptance_Credits\"><\/span>Acceptance Credits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Acceptance credits are trade finance providing short-term finance.\u00a0 An acceptance credit facility provides for the acceptance of eligible bills.\u00a0 Eligible bills are bills of exchange under the Bills of Exchange Act meeting certain criteria.<\/p>\n<p>Under an acceptance credit, the bank agrees to accept bills of exchange drawn on by the borrower when presented.\u00a0 The drawer draws the bill in accordance with the facility payable on a certain date.\u00a0 It is presented by the seller under the relevant transaction.\u00a0 It is presented for acceptance through a bank.<\/p>\n<p>The bank accepts the bill.\u00a0 The accepting bank may discount the bill on the basis of the accepting bank&#8217;s credit.\u00a0\u00a0 The drawer pays the acceptance bank funds for the amount of the bill to enable the bank to pay the bill on presentation.\u00a0 The drawer and accepting bank are liable on the bill.\u00a0 Lenders are subject to limits on the value of acceptances that they may have outstanding.<\/p>\n<p>An eligible bank should not accept bills that do not meet eligibility criteria.\u00a0 It must have adequate protections and controls to ensure bills are eligible.<\/p>\n<p>In order to be acceptable, the acceptance must be for less than six months.\u00a0 Bills must not be drawn on a non-bank, part of the banking group.\u00a0 Acceptances, where the drawer and the accepting bank have a common shareholding or control, are not usually accepted.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-12908\" data-postid=\"12908\" class=\"themify_builder_content themify_builder_content-12908 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Shorter Variants The following are debt instruments with shorter maturities, generally, than bonds. commercial paper certificates of deposit, medium-term notes, acceptance credits. Each is a bearer security negotiable by delivery.\u00a0 They are all debentures or acknowledgements of indebtedness in a wider sense. Acceptance credit facilities may provide short-term finance through the acceptance of eligible bills.\u00a0 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[168],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12908"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=12908"}],"version-history":[{"count":4,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12908\/revisions"}],"predecessor-version":[{"id":31798,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12908\/revisions\/31798"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=12908"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=12908"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=12908"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}