Bond Offerings

Bond Offerings

Writing a Note Prospectus or Bond Prospectus for Bond Offerings

Drafting a bond prospectus for debt securities for private or public offering can be complex. Our team at Proseptus.com has years of experience, literally being involved with thousands of bond offering prospectus and offering memoranda. Before explaining what the bond prospectus entails its best to first define a bond or note.

A bond or a note is essentially a guarantee that you, the company, will pay back an investor his initial capital at fixed time with a fixed rate of return. An investor is given a piece of paper, literally, that states for ‘X number of dollars you will be paid back X number of dollars at X time”. A “bond” is typically than 10 years and more until the maturity date, also called the expiration date. A “note” is essentially the same thing as a bond but its maturity date is typically under ten years. While this may be the academic definition, many issue bonds that that 1 year and notes that are 50 years.

Maturity Date

Each bond or note has a maturity date, and the prospectus will outline this expiration. When debt securities are issued, they are, unlike equity, have an expiration date. That is, the bonds will terminate at a certain point. For example, if you are given a 10-year bond that states you will be paid an annual interest payment of 10%, you will be given a 10% payment yearly for 10 years. After 10 years the bond will cease existing, i.e. it will mature.

Interest Rate

Bonds also offer an interest rate or a yield. That is, at a fixed time, which can range from weekly, monthly, quarterly, bi-annually, annually or any other variation that the issuers decide, the company will payout an interest payment. For example, if you are given a 10-year bond with a 10% annual interest rate, you will be paid this percentage yearly, on a specific date. Interest rates for notes and bonds vary from industry to industry and from the type of business one is engaging, to the amount of capital one needs, to the financial projections one will try and generate. Normally, the higher interest rate the riskier the investment. On the contrary, the smaller the interest rate the safer the investment may be.

Convertible Bonds and Convertible Notes

A convertible debt security of either notes or bonds is a common form of issuing debt. Convertible debt means that the bonds or notes will convert to equity at a certain time, or when you decide to exercise this option, if allowed. The debt securities “convert”, they change from the debt stricter of an interest payment and maturity date to that of ownership in the company, i.e. equity. Once converted, the new equity securities may include voting rights, dividend payments, and much more.

Public Debt Offerings

Many companies and including governments issue public debt. They will publicly list their debt securities on an exchange with the intent that a broader market will be reached and hence a quicker method to raise the needed capital. The listing of notes or convertible bonds on a public stock exchange is a good way to get exposure and hopefully need capital for one’s business. One must write a prospectus for a public debt issuance to get listed on a stock exchange.

Private Placement Note – Private Placement Bond

The majority of companies that issue debt securities and raise money doing so issue a private placement note or a private placement bond. In a private placement a company offers the securities “privately”, not in a public transaction. While there are rules to the private placement offering of debt (and equity), the majority of capital transactions in the venture space transpire in the private placement world. A prospectus is normally used or a private placement memorandum.

Reach out to us and let us recommend the best structure for your offering. If you are seeking a private placement of notes or a convertible bond offering, or would like to get listed on a stock exchange and issue debt securities, our team at Prospectus.com can help draft your prospectus and other documents.

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Bond Offerings


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Bond Offerings

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