The Gulf Capital Market Association
in cooperation with
Middle East Investor Relations Society
Architecture for Best Practice Debt Investor Relations in the Gulf Cooperation Council Region
November 2011
The Institute of International Finance, Inc. supports fully all the IR principles outlined herein.
Debt Investor Relations (“IR”) is the mechanism by which a government or a corporate that issues bonds and/or sukuk (“Issuers”) provides information about itself and about the financial instrument to investors and maintains a relationship with its investors.
Debt IR does not, in any sense, substitute for or operate outside of jurisdictional legal and regulatory obligations imposed on Issuers.
Debt IR serves to promote engagement between Issuers and investors and provides current and potential investors with the information they need to make informed investment decisions and exercise their rights, in particular the right to information and the rights outlined in bond/sukuk agreements.
One architrave and three pillars
- Commitment to ongoing debt/sukuk services and disclosure
- Institutionalized IR office
- Dissemination of data and information
- Communication channels and feedback
Commitment to ongoing debt/sukuk services and disclosure
Issuers should devote adequate resources to debt/sukuk IR. Support and active commitment by senior government officials and policymakers, and for corporates, by board of directors and executive management, are prerequisites for practice debt IR in the Gulf Cooperation Council (GCC) region.
1) Institutionalized IR Office
a) Issuers shall establish and maintain a institutionalized Debt Investor Relations Program (“DIRP”)
b) A DIRP shall be characterized by a dedicated IR office, designated IR officers and an IR website
There must be dedicated staff responsible for communication with investors who fulfil these duties and are recognized by investors as reliable and accessible. For sovereign and government Issuers, the IR office may be part of an independent debt management entity or a department within another financial agency, such as the Ministry of Finance (or Treasury) or the Central Bank. The country must have these functions built into the existing framework of the Central Bank, Ministry of Finance or government agency responsible for debt management.
c) The individual(s) who is (are) responsible for communicating with investors on behalf of Issuers shall be clearly identified and reachable through a website(s)
One or more official websites must contain contact information of at least one individual identified as an IR staff member and available to receive investor questions or comments. The information should be clearly marked and easy to access. The appropriate official may be either a designated IR officer or responsible for investor communications as one of his or her core duties.
2) Dissemination of Data and Information
a) Ensure that the majority of investors have access to the information
When responding to an investor query, efforts shall be made to ensure, consistent with any relevant regulatory disclosure requirement, that the response is communicated and the information is made available to all investors.
b) Not discriminate
Issuers shall not discriminate among recipients of information disclosed based on the recipient’s profile or prior opinions and conclusions.
c) Data and information provided by issuers shall be relevant to the structure of the transaction
For Sovereign/corporate credit bonds and asset-based sukuk, data and information provided must be related to the Issuer and/or originator as this is where the primary risk is anchored and where investors will have interest. In asset-backed and securitised transactions, the investor focus is on the quality and performance of the underlying asset. The Issuer will have to provide investors with qualitative and quantitative information about risk exposure and value of the underlying asset.
d) Structural information available
Information on structural factors (e.g., legal, regulatory, governance frameworks) supported by data must be available as appropriate. Issuers shall provide information on the economic situation of the region, country and sector
e) Data must be presented in market-friendly format
Issuers must provide data and information in English and Arabic. As a start, the IR staff should ensure that a clear roadmap for availability of information in English will eventually match the data and information available in Arabic. Ideally, data should be presented in a user-friendly format that can be easily manipulated electronically.
f) Sovereign and Government Issuers: The country must subscribe to SDDS The country must subscribe to the International Monetary Fund’s (IMF’s) Special Data Dissemination Standard (“SDDS”) which was established by the IMF to guide members having or seeking access to international capital markets in the provision of their economic and financial data to the public. The SDDS identifies four dimensions of data dissemination:
- data coverage, periodicity and timeliness;
- access by the public;
- integrity of the disseminated data; and
- quality of the disseminated data.
For each dimension, the SDDS prescribes two to four monitorable elements — good practices that can be observed, or monitored, by users of the statistics.
g) Macroeconomic data and information
Government agencies should have a clear mandate for the ultimate compilation and dissemination of macroeconomic information. The publication should follow a preannounced advance release calendar, and at a minimum meet the specification for timeliness and periodicity (i.e. monthly or quarterly) set forth in the IMF’s SDDS. Issuers shall rely on officially approved macroeconomic data.
h) Historical information available
Investors shall be able to locate recent retrospective information for various areas of data.
i) Forward-looking policy information available
Investors shall be able to identify the Issuer’s economic planning through the presentation of comprehensive economic/business outlook reports for the relevant period. For Sovereign and Government Issuers, this includes the identification of monetary and fiscal policy objectives, as well as assumptions for the economic variables relevant for the individual jurisdiction.
j) Issuers shall give access to information to analysts and allow direct communication with company representatives
k) Active investor contact list
Issuers shall maintain a list of investors. For Sovereign and Government Issuers, ideally, authorities update and maintain their investor contact lists annually and the officials from government agencies should distribute policy and macroeconomic information to the investor list via e-mail at least every two weeks.
3) Communication Channels and Feedback
a) Issuers shall endeavour to use all different channels of communication available to them. These include but are not limited to:
- Website
The IR section of the Issuer’s website must be available in Arabic and English. For Sovereign Issuers, if there is not a dedicated IR website, then the Central Bank and Ministry of Finance (or Treasury) websites must be in Arabic and English. Issuers shall ensure that the website is accessible. It must be designed to allow equal access to information and services to all users. Investors should be able to register on the website and receive on a regular basis via e-mail relevant information such as data releases, policy information or notices about roadshows or conference calls. Websites must contain an archive of materials presented to investors at roadshows, conference calls, investor presentations and transcripts of speeches by key policymakers or senior management, as appropriate. - One-to-one meetings
Issuers shall conduct bilateral meetings with investors on a regular basis. The meetings may be held domestically or abroad. - Non-deal roadshows
Issuers must conduct informational meetings convenient for investors and not associated with transactions (non-deal roadshows), at least annually. The CFO and/or Treasurer should participate in non-deal roadshows. - Investor conference calls
Issuers must conduct regular investor conference calls. Investors should be invited via email and/or an announcement on the Issuer’s website. For Sovereign and Government Issuers investor conference calls must be on key economic data and policies at least every quarter.
Emails – Web-based communication with investors
Issuers shall respond to investor queries or concerns via e-mail or via an HTML-based feedback mechanism. Responses should be received within 36 hours.
b) Investor feedback reflected in decisions
Senior policymakers and management should take market input into account in their policy/corporate decisions.
c) Senior policymakers’ and senior management’s participation in IR activities
Participation by senior policymakers (Minister, Central Bank Governor or one of their deputies) and senior management (CFO and/or Treasurer) is necessary when appropriate. Senior policymakers/management must be involved in at least two of the following three activities: conference calls, bilateral meetings and non-deal roadshows.
d) Regular self-assessment of DIRP Issuers must conduct regular self assessments of their DIRP on an annual basis to identify successes and gaps. The self-assessment may be conducted through a survey distributed to the entire investor base or to a representative sample of the investor base.