Assignment is a standard mechanism for transferring a claim from one person to another. With bonds, its usability depends on the nature of the issue and the documentation. This article sets out the general framework.
What is transferred
The claim is transferred to the extent described in the contract — typically the principal, sometimes accessory rights and unpaid coupons.
The scope must be read from the contract, never assumed.
What is required
Documents proving the existence and amount of the claim, identification of the parties and any registration of the bond.
Some bond forms also require a change of registration or notification of the issuer; the issue documentation decides.
What to look for in the contract
The points with the greatest practical impact.
- the amount and payment date of the consideration
- the representations and warranties you give as seller
- the moment the claim passes
- what happens if the claim does not exist to the extent declared
Legal review
Have the contract reviewed by a lawyer. This is a transfer of a property right and the text prevails over verbal explanations.
A serious counterparty has no problem with legal review and shares the text well in advance.
To find out whether assignment is available for your issue, have the documents reviewed — the answer follows from them.
This text is general information for bondholders. It is not legal advice and not an investment recommendation. Capital Investing Ventures a.s. is not a law firm. Any individual assessment depends on the specific documentation and circumstances of the case.