Debt Capital Markets and Debt Equity Markets

Overview of the Bond Trustee and Security Agent

Pacific Trustees is an experienced trustee within the Pacific Trustees Group is able to provide Bond Trustee, Security Agent and administrative services to the financial market such as Debt Capital Markets and Debt Equity Markets. We are typically appointed as independent Security Agent and Security Trustee to avoid litigation arising from Bonds and other transactions involving bilateral loan, syndicated loan and other types of loans involving Arrangers, Borrowers and Lenders.

In addition, Pacific Trustees Group is able to provide independent trustee and security agent services for complex amendment, restructuring and enforcement processes. We have acted in respect of a broad range of Asset-Backed Securitisation (ABS) involving different asset classes including: plain vanilla ABS, asset finance, repacks, distressed assets, high yield bonds, project finance, securitisations, Collateral Loan Obligation (CLO), Non-Performing Loan (NPL), Rental Receivables (malls and offices) and Automobile Loan (Hire Purchase).

The role of Bond Trustee and Security Trustee/Agent primarily includes:

  1. To constantly monitor industry and market developments in the Private Debt Securities (PDS) business to keep up with regulatory changes as well as market specific practices.
  2. To pro-actively involve and participate in pre-issuance documentation meetings by providing the proper and correct feedback and comments to parties.
  3. To continually develop and enhanced systems (both operationally and IT) and to fortify human resource management and planning to meet modern stringent regulatory and legal requirements.
  4. To engage and provide positive feedback loop to both regulators and industry players/participants to enhance existing Bond structures.
  5. To persistently engage Issuers to ensure proper monitoring of compliance with covenants, terms and conditions of the Trust Deed.
  6. To provide or facilitate obtaining ‘win-win’ solutions for both Issuers and Holders for non-compliance, breach or Event of Default (EOD) conditions.
  7. To ensure that all securities to be held by the Security Trustee are perfected at the time and in the manner prescribed in the relevant PDS structures.

In addition, a bond trustee usually has the following independent powers and discretions:

  1. the bond trustee usually has discretion to agree minor amendments and waive technical breaches, and
  2. certain events of default do not trigger acceleration of the debt securities unless the bond trustee has certified that the event is, in its opinion, materially prejudicial to the interests of the holders of the securities.

PDS overview-1-01

  1. Issuer appoints Trustee (Bond Trustee/Security Trustee) & Facility Agent for the bonds issuance programme.
  2. Issuer opens the Designated Account and charged to the Security Trustee.  Detailed below are some of the examples of Designated Account:-

     i.            Finance Service Reserve Account
    ii.            Disbursement Account
    iii.            Proceed Account
    iv.            Operation Account

    Security Trustee will solely operates the Designated Account under item (i) to (iii), while the Operation Account will be solely operated by the Issuer.
    When Event of Default is declared Operations Account will be operated by the Security Trustee.

  3. Issuer issues bond to the bondholders.
    3a)Facility Agent updates the details of the issuance in BNM Fast website.
    3b)The bonds are credited into the CDS account maintained by the Bondholder with ADI.
  4. The bond proceeds are remitted to the Disbursement Account solely operated by the Security Trustee.
  5. The Security Trustee release the funds in accordance with the utilization proceed schedule in the Trust Deed (payment of expenses in relation to the issuance, built up sum to FSRA, release to Operation Account).
  6. The Security Trustee remits the coupon/redemption payment to Facility Agent. Facility Agent remits the coupon/redemption payment to BNM Account.