Structured bonds

The concepts of "structured bond" and "structured bond program" were introduced into Federal Law No. 39-FZ dated 22 April 1996 "On the Securities Market" by Federal Law No. 75-FZ dated 18 April 2018 "On Making Amendments to the Federal Law "On the Securities Market" to the Extent Related to Regulation of Structured Bonds" (took effect on 16 October 2018).

Specific aspects of structured bonds

  • Structured bonds may be issued by credit institutions, brokers, dealers, or special-purpose financial vehicles only.
  • Structured bonds may be purchased by qualified investors only, unless otherwise stipulated by the Bank of Russia.
  • Distributions payable on structured bonds and their amount depend on whether or not the circumstances provided for in the bond resolution occurred (the list of circumstances is set out in paragraph 1, clause 29, Article 2 of the Federal Law "On the Securities Market").
  • Early redemption of structured bonds at the discretion of the issuer is prohibited, save for the circumstances beyond control of the issuer, which are stipulated in the bond resolution.
  • For structured bonds to be issued, collateral needs to be provided (unless structured bonds are issued by a credit institution).
  • Structured bonds may be redeemed in the following forms:
    • Redemption in cash (CASH).
    • Redemption in securities (SECU).
    • Redemption in both cash and securities (CASE).
    • Other (OTHR).

Documents to be submitted by the issuer for a structured bond issue to be accepted by NSD for servicing

Document Form Submission date Notes
Bond Prospectus Original No later than (R-5), where R is the bond offering start date Applicable where the state registration of, or the assignment of an identification number to, the bond issue involves the registration of a Bond Prospectus
Bond Resolution Original No later than (R-5)  
Certificate Original No later than (R-5) If the issuance of a certificate is provided for
Notice of a Bondholder Representative Original No later than 11:00 am on (R-2) Applicable in the cases provided for by the laws of the Russian Federation, where the issuer is required to designate a bondholder representative before the bond offering process starts
Notice of the Contents of an Issuer's Competent Body's Resolution to Issue Structured Bonds A copy attested by the issuer No later than 11:00 am on (R-2) Applicable in the cases provided for by the laws of the Russian Federation, where the issuer is required to set the relevant parameters before the bond offering process starts. The document must contain the mark confirming that the document has been filed with the competent authority
Bond Issue Acceptance and Servicing Notice Form Z1.1 No later than (R-5)  

Documents that govern interaction between NSD and issuers

Allocation of codes to structured bonds
Allocation of ISIN and CFI codes:

  • ISIN: assigned by NSD in accordance with the ISO 6166 standard.
  • CFI: assigned by NSD in accordance with the ISO 10962 standard:

    DSXXXX – for structured bonds with partial capital protection;
    DEXXXX – for structured bonds without capital protection

Codes as per the Bank of Russia's classification*:

  • SN1 – structured debt securities of Russian resident credit institutions
  • SN2 – structured debt securities of other Russian residents

    * In accordance with Bank of Russia's Directive No. 4927-U dated 8 October 2018 "On the List, Templates, and Method of Preparation and Submission of Reporting Forms by Credit Institutions to the Central Bank of the Russian Federation".

Specific aspects of structured bond-related corporate actions and documents to be submitted by structured bond issuers to NSD

CA option Documents to be submitted to NSD
No principal payment CA Notice (containing information on the circumstances that have resulted in the change in the payment amount)
and
Form Z4 "Notice of Bond Redemption"
Partial principal payment CA Notice (containing information on the circumstances that have resulted in the change in the payment amount)
and
Form Z1.1 "Bond Issue Acceptance and Servicing Notice"
Principal payment other than in cash CA Notice (containing information on the redemption form)
and
Form Z4 "Notice of Bond Redemption"
No coupon income payment CA Notice (containing information on the circumstances that have resulted in the change in the payment amount)
or
Form Z1.1 "Bond Issue Acceptance and Servicing Notice"
Partial coupon income payment CA Notice (containing information on the circumstances that have resulted in the change in the payment amount)
or
Form Z1.1 "Bond Issue Acceptance and Servicing Notice"

CA Notice (containing information on the circumstances that have resulted in the change in the payment amount)

When carrying out a corporate action with payments that depend on whether or not a specific circumstance has occurred, the issuer of structured bonds sends to NSD a CA Notice stating the amount of payment and accompanied by the Form set out in Appendix 8 to the Rules of Interaction with NSD in the Course of Corporate Information Sharing, Corporate Actions Processing and Other Transactions.

The CA Notice must contain the following details:

  • description of the circumstance that has resulted in the change in the payment amount;
  • relevant paragraph of the issue-related documents (e.g., paragraph of the Bond Resolution);
  • status of the circumstance (occurred/not occurred); and
  • other relevant information.

Submission date:

No later than one business day after the circumstance occurrence/non-occurrence date.

Communication channel to be used:

  • Issuer's Web-client (NSDirect).
  • If the issuer does not use Web-client: other communication channels provided for by the NSD EDI Rules.

Information received from the issuer will be forwarded by NSD to its clients and posted here.

CA Notice (containing information on the redemption form)

If structured bonds may be redeemed in different forms, the issuer sends to NSD a CA Notice with only one of the following CA options ticked:

  • CASH – redemption in cash
  • SECU – redemption in securities
  • CASE – redemption in both cash and securities
  • OTHR – other

The issuer may specify that NSD's clients are required to give instructions, as well as set the deadline (date and time) for giving such instructions.
In the field "CA's additional details", it is required to provide the basis in accordance with which the particular redemption form was determined.

Submission date:

No later than one business day after the date on which the redemption form was determined.

Communication channel to be used:

  • Issuer's Web-client (NSDirect).
  • If the issuer does not use Web-client: other communication channels provided for by the NSD EDI Rules.

Information received from the issuer will be forwarded by NSD to its clients and posted here.

Form Z4 "Notice of Bond Redemption"

Where no payments are to be made in connection with the redemption/early redemption of structured bonds, or if payments are to be made other than in cash, the issuer is required to submit Form Z4 "Notice of Bond Redemption", in which, in the field "Notes", the issuer must specify the quantity of bonds to be redeemed and the grounds on which the issuer's obligations are terminated (including information on the circumstances the occurrence or non-occurrence of which constitutes the ground not to make payments in connection with the redemption, with a reference to the applicable paragraph of the issue-related documents).

If necessary, the issuer provides NSD with any documents evidencing the occurrence or non-occurrence of the relevant circumstances, which constitutes the ground not to make payments in connection with the redemption, or documents evidencing the discharge by the issuer of its obligations to redeem the bonds.

Submission date:

No later than one business day after the redemption date, or no later than the redemption date where all of the bonds are available in the issuer's issuer account or treasury securities account.

Communication channel to be used:

LUCH

Information received from the issuer will not be forwarded to NSD's clients; such information is needed to confirm the debiting of the securities from the account in accordance with paragraph 13.1 of Article 8.2 of the Federal Law "On the Securities Market".

Form Z1.1 "Bond Issue Acceptance and Servicing Notice"

For the purposes of payment of proceeds from redemption of structured bonds, which are less than their nominal value, the issuer is required to submit to NSD Form Z1.1 "Bond Issue Acceptance and Servicing Notice" stating the payment date and the payment amount per bond (as a percentage and/or in the payment currency). In the field "Notes", the issuer must specify the circumstances the occurrence or non-occurrence of which constitutes the ground to pay the nominal value upon redemption not in full, with a reference to the applicable paragraph of the issue-related documents.

Where the obligations to pay income from structured bonds are not discharged or discharged not in full, depending on whether or not certain circumstances have occurred, and provided that the issuer has not already given a CA Notice (containing information on the circumstances that have resulted in the changes in the payment amount), the issuer is required to submit to NSD Form Z1.1 "Bond Issue Acceptance and Servicing Notice", in which, in the field "Notes", the issuer must provide information on the circumstances the occurrence or non-occurrence of which constitutes the ground not to pay income, with a reference to the applicable paragraph of the issue-related documents.

Submission date:

No later than one business day after the circumstance occurrence/non-occurrence date.

Communication channel to be used:

LUCH

Information received from the issuer will not be forwarded to NSD's clients; such information is needed to confirm the debiting of the securities from the account in accordance with paragraph 13.1 of Article 8.2 of the Federal Law "On the Securities Market".

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