Accounting Management of Bond Issuances
Legal and accounting management of the bond issuance process as a means of obtaining financing for large-scale projects that would be difficult to finance through a single lender.
TECHNOLOGY DESCRIPTION
Bonds may be issued by public limited companies, partnerships limited by shares and also private limited companies, although the law establishes certain safeguards for the latter type of legal entity: they may not issue bonds convertible into shares, and the total amount of the issue may not exceed twice their equity unless the bonds are guaranteed. In practice, however, bond issuances are a form of financing used by large companies that can offer investors guarantees of solvency.
Bond issuances must always be formalised in a public deed, which must provide information on the basic terms of the issue, and require the establishment of a bondholders’ association or bondholders’ syndicate to protect investors’ rights. Bond issuances entail financial costs, such as implicit and explicit interest, and the values associated with bonds include the issue price, nominal value, redemption value, issue premium and redemption premium. In addition to conventional bond issuances, there are convertible bonds, which are redeemed through conversion into shares of the issuing company.
Our team can assist companies by providing comprehensive accounting management of bond issuances, focusing on the following key aspects:
- Preparation of the issue prospectus: We assist in preparing the prospectus required by the Spanish National Securities Market Commission (CNMV), which contains all relevant details regarding the terms of the issue, associated risks and other essential information to enable investors to make informed decisions.
- Recognition and measurement of bonds issued: We carry out accurate accounting recognition and appropriate measurement of bonds issued. This not only complies with legal and accounting requirements, but also helps to provide a true and fair view of the companies’ economic, financial and asset position. This is essential for maintaining transparency and building investor confidence.
- Assessment of the financial impact: We carefully analyse the impact of the bond issuance on companies’ cash flows and capital structure. We also examine the associated financial costs and assess the ability to meet payment obligations in both the short and long term. This assessment is essential for effective financial planning.
TECHNOLOGY APPLICATIONS
The knowledge offered can be applied to SMEs and large companies in any economic sector. In general, debt issuance can be an appropriate financing strategy for companies requiring significant investment to develop long-term projects, such as infrastructure construction, the acquisition of machinery, or the financing of research and development. It may also be an appropriate way of refinancing debt and achieving a lower financial cost.
ADVANTAGES AND INNOVATIVE ASPECTS
We have extensive know-how in the field covered by this offer. In addition to our teaching experience in subjects such as Financial Accounting, Company Accounting and International Financial Reporting Standards across different Bachelor’s and Master’s degree programmes, we have knowledge of the national and international accounting regulations governing bond issuance processes and their practical application. Furthermore, our research focuses on the study of the economic, financial and asset position of companies under different assumptions and in different contexts.
DEVELOPMENT STAGE
Ready for immediate implementation. The knowledge has been consolidated through years of teaching and research experience. The team can immediately act as a strategic consultant or external auditor for valuation and accounting processes.
APPLICATION SECTORS
- Industrial and Construction Companies.
- Energy and Technology Corporations.
- Financial Institutions and Investment Funds.
- Growing SMEs (Scale-ups).
PRINCIPAL INVESTIGATOR
Mónica González Morales – Department of Economic and Financial Studies