144A vs Reg S

144A vs Reg S

WOJ can assist with your Reg S and 144A offerings.

144A offerings are some of the most popular methods used globally to raise debt capital. That is, companies seeking to borrow, in a sense, from QIBs capital to fund their business . In return the investor(s) will receive an interest payment and his/her capital back at maturity.

Question: What are the main differences between Regulation S and Rule 144A?

Question: If US issuer and I’m a foreign investor, which rule should I focus?

Answers: for Regulation S and 144A Issues

Regulation S – Bonds sold under Regulation S may not be offered, sold or delivered within the United States or to, or for the acount or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

Before seasoning, bonds sold under Regulation S (RegS), can only be offered in the U.S. to qualified institutional buyers (QIBs) in reliance on Rule 144A.

144A – Rule 144A is an SEC rule issued in 1990 that modified a two-year holding period requirement on privately placed securities by permitting QIBs to trade these positions among themselves.

Reg S and 144A Bonds are generally assigned two separate sets of securities identification codes. Typically, Reg S bonds get a common code and an International Securities Identification Number (“ISIN”) and are generally accepted for clearance through the Clearstream, Luxembourg and and other systems. 144A bonds get a CUSIP number and an “ISIN” and are generally accepted for clearance through the DTC system.

144A is a private placement in the US for US investors
RegS is a Bond issued in the Eurobond market for international investors

Note that after the initial period both series are normally merged mainly in an effort to increase the liquidity of such bonds.

WOJ can assist with your 144A or Reg S Offerings.

Contact us for a free 144A or Reg S consultation.