Euro PP Charter

The Euro PP Charter is the non-binding market framework that describes best practice for a Euro PP transaction between borrowers, investors and arrangers. Its first version, drafted in February 2014, was released in March 2014 under the aegis of the Banque de France and CCI Paris Île-de-France. In April 2014, a Euro PP steering committee (Comité de pilotage Euro PP) brought together the Banque de France, the CCI, the French Treasury, Paris Europlace and around ten professional associations. On 8 January 2015 it made two standard contracts available, one for loans and one for bonds. The version updated in September 2019 and published in October 2019 simplifies the documentation, provides for an accelerated procedure of about six weeks between launch and disbursement of the funds and opens the way to green, social or sustainable Euro PPs. The Charter describes a typical Euro PP: an amount of around €10m to several hundred million euros, financing for growth or refinancing, borrower leverage below around 4x, ranking pari passu with the other senior creditors. Its appendices contain a borrower presentation file, a list of know your customer documents, an ESG questionnaire, an indicative term sheet and template bond and loan agreements. The Code of best practice for arrangers that AMAFI published in January 2016 supplements it. For the borrower, the Charter serves as the basis for negotiation: the negative pledge, change of control, cross default and prepayment clauses appear in it with options among which the parties choose.

A mid-sized company preparing a first €40m Euro PP starts from the Charter’s indicative term sheet. It selects a net leverage covenant below 3.5x, a negative pledge limited to its material subsidiaries and a cross default triggered above €5m of unpaid debt.

• The accelerated procedure timetable: about six weeks from launch to disbursement.
• The options in the standard clauses: negative pledge scope, cross default threshold.
• The borrower presentation file that investors ask for.
• The ESG questionnaire with a view to a possible green or sustainable Euro PP.