Debt Issuance

Issuing debts to third parties, in a private placement or through a public issuance

Many types of financial instruments can be used by Luxembourg companies for debt issuance. No limitation is imposed by the law in terms of borrowing or leverage.

Loans or Mortgages

Any Luxembourg company may borrow from a third party; this being a bank, its shareholder or any unrelated person. The loans may be backed by a pledge or a guarantee over the Luxembourg company's assets.

Bond issuance

Bonds may be issued by a Luxembourg company to finance its activities. The bonds may be issued for a short, medium or long-term period and are negotiable (can be transferred to a third party, while a loan is non-transferable). The bond generates a fixed or variable interest rate most often based on a reference rate or index (Euribor, Sofr, etc).

Of all types of bonds, issuers may prefer "Zero-Coupon" bonds which do not have a specific interest rate but are redeemed to the holder with a premium.

Bonds generally bear interest which will be payable periodically or at maturity, based on the coupon's terms and conditions.

Subordinated and Convertible bonds

Subordinated bonds/loans are debt instruments which are refundable after all other loans/bonds are repaid.

Convertible bonds bear a fixed interest and can, according to certain conditions mentioned in an offering memorandum, be converted into shares.

Subordination and convertibility may be used in the same bond issuance.

Hybrid Debt Instruments

These debts/loans may contain different clauses in their offering memorandum; some being related to a fixed interest instrument and others being related to a shareholder's right.

Luxembourg Companies may choose among the following types of hybrid debts:

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