Kocian Solc Balastik (KSB) has advised J&T Banka on what it calls a “unique legal arrangement” in the Czech Republic: issuing bonds that offer investors a fixed yield with no maturity date.
J&T Banka is a Czech private full-service bank that was established in 1998.
According to KSB, “stricter requirements on a bank’s capital structure have resulted in banks issuing hybrid instruments such as perpetual bonds, which are counted as Tier 1 capital. This marks the first time such an instrument has ever been issued in the Czech Republic. A number of issues had to be resolved beforehand, however, such as the legal structure and acceptability for the regulator.”
The firm reports that preparation work for perpetual bonds was more challenging than that for standard securities, but the process "culminated at the end of June 2014 when the Czech National Bank approved the prospectus and the perpetual bonds were offered to preselected investors.” KSB reports that interest of the preselected investors is said to be strong.