‘PART 12

Securities issues statistics

Section 1: Introduction

Securities issues statistics for the euro area provide two main aggregates:

A principal distinction must be drawn on the basis of the residency of the issuer whereby the Eurosystem NCBs collectively cover all issues by the residents of the euro area (1). The Bank for International Settlements (BIS) reports issues by the “rest of the world” (RoW), referring to all non-euro area residents (including international organisations not resident in the euro area).

The table below summarises the reporting requirements.

Section 2: Reporting requirements

Table 1

Block A reporting form for NCBs

Table 2

Block C reporting form for NCBs

Table 3

Block A memorandum items reporting form for NCBs

1.   Residency of the issuer

Issues by subsidiaries owned by the reporting country's non-residents operating in the reporting country's economic territory must be classified as issues by the reporting country's resident units.

Issues by head offices located in the reporting country's economic territory which operate internationally must also be considered as issues by resident units. Issues by head offices or subsidiaries located outside the reporting country's economic territory but owned by residents of the reporting country must be considered as issues by non-residents. For example, issues by Volkswagen Brazil are considered to have been carried out by units resident in Brazil and not in the reporting country's territory. In the absence of any physical dimension to an enterprise, its residence is determined according to the economic territory under whose laws the enterprise is incorporated or registered (6).

To avoid double counting or gaps, the reporting of issues by special purpose entities (SPEs) must be addressed bilaterally, involving the reporters concerned. The NCBs, and not the BIS, must report issues by SPEs which fulfil the residency criteria of the ESA 2010 and are classified as euro area residents.

2.   Sectoral breakdown of issuers

Issues must be classified according to the sector incurring the liability for the securities issued. The sectoral classification comprises the following 12 types of issuers:

Securities issued through SPEs where the ultimate liability for the issue is incurred by the parent organisation and not the SPE must be attributed to the parent organisation and not the SPE. For example, issues by an SPE of “AJAX Electronics”, a non-financial corporation located in the euro area country “Country A”, would have to be allocated to the non-financial corporation sector and reported by Country A. However, the SPE and its parent must be resident in the same country. Hence, where the parent company is not a resident of the reporting country, the SPE must be treated as a notional resident of the reporting country, and the issuing sector must be aligned with the economic function of the SPE. For example, if “ACME Motors” was a non-financial corporation resident in Japan producing automobiles and “ACME Motor Finance” was a subsidiary resident in euro area country “Country B”, issues by ACME Motor Finance would have to be attributed to captive financial institutions of Country B, because the parent company ACME Motors is not resident in the same country. The only exception to this is the case of SPEs owned by government, in which case the security is recorded as being issued by the government in the country of the parent organisation (8).

A public corporation that becomes privatised by issuing listed shares must be allocated to the non-financial corporation sector. Similarly, a public credit institution (CI) that is privatised must be allocated to the MFIs other than central banks sector. Issues by households or non-profit institutions serving households must be classified as issues by non-financial corporations.

3.   Maturity of issues

Short-term debt securities comprise securities that have an original maturity of one year or less, even if they are issued under longer-term facilities.

Long-term debt securities comprise securities that have an original maturity of more than one year. Issues with optional maturity dates, the latest of which is more than one year away, and issues with indefinite maturity dates, are classified as long-term.

A two-year maturity split, as in the MFI balance sheet statistics, is not required.

4.   Classification of long-term debt securities by interest rate

Long-term debt securities are divided into:

5.   Classification of issues

Issues are analysed under two broad groupings: (a) debt securities (10), and (b) listed shares (11). Securities issued via private placement are covered as far as possible. Money market paper is included indistinguishably as part of debt securities. Unlisted shares (12) and other equity (13) may be reported on a voluntary basis as two separate memorandum items. Shares/units issued by money market funds and other investment funds are excluded.

The following is a non-exhaustive list of instruments covered in in the securities issues statistics:

6.   Currency of issue

Dual currency bonds must be classified according to the denomination of the bond. Dual currency bonds are defined as bonds that are scheduled to be redeemed or the coupon paid in a different currency from the denomination of the bond. If a global bond is issued in more than one currency, each portion must be reported as a separate issue, according to its currency of issue. Where issues are denominated in two currencies, e.g. 70 % in euro and 30 % in US dollars, the relevant components of the issue must be reported separately where possible according to the currency denomination. Hence, in the given example 70 % of the issue must be reported as issues in euro/national denominations (14) and 30 % as issues in other currencies. Where it is not possible to separately identify the currency components of an issue, the actual breakdown made by the reporting country must be indicated in the national explanatory notes.

7.   Time of recording issue

An issue is considered to have occurred when the issuer receives payment, and not when the syndicate takes up the commitment.

8.   Reconciliation of stocks and flows

NCBs must submit information on outstanding amounts, gross issues, redemptions and net issues of short-term and long-term debt securities and on listed shares.

The table below illustrates the link between stocks (i.e. outstanding amounts) and flows (i.e. gross issues, redemptions and net issues). In practice, the link is more complex due to price and exchange rate valuation changes, reinvested (i.e. accrued) interest, reclassifications, revisions and other adjustments.

(a)   Gross issues

Gross issues during the reporting period must include all issues of debt securities and listed shares where the issuer sells newly-created securities for cash. They concern the regular creation of new instruments. The point in time at which issues have been concluded is defined as the time at which payment is made; the recording of issues must therefore reflect as closely as possible the timing of payment for the underlying issue.

For listed shares, gross issues cover newly-created shares which are issued for cash by corporations listed on a stock exchange for the first time, including newly-created companies or private companies becoming public companies. Gross issues also cover newly-created shares which are issued against cash during the privatisation of public corporations when the corporation's shares are listed on a stock exchange. The issue of bonus shares must be excluded (15). Gross issues must not be reported in the event of a sole listing of a corporation on a stock exchange where no new capital is raised.

The exchange or transfer of existing securities during a takeover or merger is not covered (16) within the reported gross issues or redemptions, except for new instruments which are created and issued against cash by a euro area resident entity.

Issues of securities which can later be converted into other instruments must be recorded as issues in their original instrument category; on conversion they are to be recorded as having been redeemed from this instrument category, with an identical amount then treated as gross issues in a new category (17).

(b)   Redemptions

Redemptions during the reporting period cover all repurchases of debt securities and listed shares by the issuer, where the investor receives cash for the securities. Redemptions concern the regular deletion of instruments. They cover all debt securities reaching their maturity date, as well as early redemptions. Company share buy-backs are covered if the company either repurchases all shares against cash prior to a change of its legal form, or repurchases part of its shares against cash and subsequently cancels them, leading to a reduction in capital. Company share buy-backs are not covered if they represent investments by a company in its own shares (18).

Redemptions must not be reported in the event of a sole delisting from a stock exchange.

(c)   Net issues

Net issues are the balance of all gross issues made minus all redemptions that have occurred during the reporting period.

The outstanding amounts of listed shares must cover the market value of all the listed shares of the resident entities. The outstanding amounts of listed shares reported by a euro area country may therefore increase or decrease following relocation of a listed entity. This also applies in the event of a takeover or merger where no instruments are created and issued against cash and/or redeemed against cash and cancelled. To avoid double counting or gaps for debt securities and listed shares in the event of an issuer relocating to another resident country, the relevant NCBs must coordinate the timing of reporting of such an event bilaterally.

9.   Valuation

The value of a securities issue comprises a price component and, where an issue is denominated in a currency other than the reporting currency, an exchange rate component.

NCBs must report short-term debt securities at face value (19) and listed shares at market value. For long-term debt securities different methods may be used for valuation depending on the interest rate type, resulting in a mixed valuation for the total. For example, fixed interest rate and variable interest rate issues are typically valued at face value, and zero coupon bonds at the nominal value. Generally, the relative amount of zero coupon bonds is small, so that no provision for a mixed valuation value is made in the code list; the total amount of long-term debt securities is reported at face value. Where the magnitude of the phenomenon is significant, the value “Z” for “not specified” is used. In general, whenever there is a situation where mixed valuation occurs, details are provided by the NCB at the attribute level in accordance with the attributes in Annex III.

(a)

Price valuation Stocks and flows of listed shares must be reported at market value. An exception to the recording of stocks and flows of debt securities at face value is made in respect of deep-discounted and zero coupon bonds, where the outstanding amounts and gross issues are recorded at the nominal value, i.e. the discounted price at the time of issue plus accrued interest, and the redemptions at maturity at face value. The nominal value of the outstanding amounts of zero coupon bonds can be calculated as shown below.