# **5. Relative Importance and Impact of Hybrid Offer Regimes in Select Countries**

Figure 1 shows the relative importance of the hybrid issuance channel as a proportion of total value of issuance. In general, data on nonpublic offerings—private placements and HBORs—are not easily available, particularly in the more developed markets of the EU and the United States, which do not require registration with regulators, making these issuances more difficult to track. With regard to EMCs, data on HBOR issues was available from securities regulators, who are keener and more able to monitor these issues, given the relative novelty of the regimes in their countries and because regulators tend to be more involved in the HBOR issuance process than those in the EU and the United States.

Among the EMCs, the HBOR carries the most importance in Malaysia, India, Brazil, and Thailand, accounting for 99, 85, 69, and 43 percent of total issuance value in 2010, respectively. HBOR’s share of issuance in Brazil and Thailand has since gone up to 87 and 85 percent in 2013, respectively.<sup>22</sup> The United States and the EU HBORs also account for a sizeable portion of total issuance: 28 percent<sup>23</sup> and 65 percent,<sup>24</sup> respectively.

Interestingly, Chile has had only a single issuance under the HBOR since its introduction in 2001. Based on consultations with the Chilean securities regulator, this could be for two possible reasons: (1) it has not introduced matching flexibilities in investment regulations for institutional investors, and (2) issuers and intermediaries have an inertial preference to continue preparing full prospectus disclosures. For example, although the HBOR eliminated the credit rating requirement, major institutional investors, such as pension funds, are still required by regulation to invest only in securities with a credit rating. Nevertheless, Chile is included in the above analysis, because it serves as an important example, highlighting the need for appropriate regulatory amendments to take place on the investment side to enable issuers to take advantage of benefits provided by the HBOR.

> 22 The figure for Thailand is as of Q3 of 2013.

> 23 Figure derived from Thomson Financial (Thomson One Banker-Deals Module), SIFMA, and World Bank calculations.

> 24 Comprehensive issuance data by offer type (public vs. exempt) within the EU region is not currently available. As an attempt to determine a best estimate, a representative proxy was used based on Eurobond offers with a minimum unit denomination of €50,000 that were listed in 2010 on the Luxembourg Stock Exchange (LuxSE), one of the largest Eurobond listing venues in Europe. Thus, the data try to capture offers taking advantage of prospectus exemptions based on the minimum denomination condition, i.e., offers with a denomination of €50,000 or greater, which was the regulatory threshold in 2010 (the threshold was increased to €100,000 in 2012). The data include only euro-denominated offers. The main caveats of the analysis are that the data do not take into account: offers in other currencies, exempt offers based on conditions other than the minimum denomination, and offers made on a national basis outside the Eurobond markets. Data derived from Luxemburg Stock Exchange, International Capital Market Association (ICMA) consultations, and World Bank calculations.

21