Trustee services for bond loans

• Trustee services are usually established for bond loans registered in VPS (The Norwegian Central Securities Depository)
• Borrowers appoint the trustee and pay for trustee services during the term of the loan
• The appointed trustee makes sure that the borrower fulfils its commitments, as set forth in the loan contract, throughout the loan period

 What are the benefits of a trustee services plan?

• Active monitoring of loan status
• Monitoring and/or holding of loan security
• Taking legal action against borrowers in the event of default, on behalf of all lenders
• Enforcing equal treatment of all lenders, including protection from attempts to wield undue influence by bondholders with special interests

How do borrowers benefit from one trustee services plan?

• Borrowers need only deal with one single legal counterparty representing all creditors, and they are shielded from pressure exerted by individual creditors or groups of creditors that may have special interests
• Borrowers can make minor modifications and clarifications to loan agreements efficiently, without convening a meeting of all lenders
• If loan renegotiation becomes necessary, the borrower can discuss alternative solutions and approaches confidentially with the trustee
• Required loan documentation is prepared

What trustees don’t do

• A trustee generally does not assess borrowers’ financial strength or ability to service their bond loans
• The trustee does not participate in loan cash flows
  

Norsk Tillitsmanns's fee schedule for bond and loan agreements (All prices are excluding Norwegian VAT and are annual fees unless otherwise specified)

Industrial sector

Type of bonds	Industry, foreign companys
Ordinary	40,000 - 500,000
Subordinated	40,000 - 500,000
Convertible	60,000 - 500,000

Financial sector, Covered Bonds

Number of current loans:	< NOK 100 mill.	>= NOK 100 mill.
0 - 5	17,000	27,000
6 - 10	14,000	22,000
11 - 25	12,000	17,000
>25	12,000	12,000
>50*	7,000	7,000
* Applies only to standard fix or FRN loans

Financial sector - Subordinated, Capital Content Securities

< NOK 20 mill	< = NOK 20 mill. and < NOK 100 mill	>= NOK 100 mill.
22,000	27,000	32,000

Municipal sector

Term	< NOK 100 mill.	>= NOK 100 mill.
<= 3 years	12,000	17,000
> 3 years	17,000	22,000

Addition: 

Service	Each NOK
Addendum related to new tranches	2,000*
Increase of max. loan amount in open issues	6,000*
AIO** < NOK 100 mill.	price on request
AIO >= NOK 100 mill.	5,000

(*one-time fee,  **AIO=equity linked bond)