Gilles Kolifrath, Partner at Kramer Levin Ramona Tudorancea, Associate at Kramer Levin

1. The current French MarketEuro PP Charter & Recent Deals and TrendsNational Regulatory Requirements /New Perspectives for Insurance Companies Gilles Kolifrath, Partner at Kramer Levin Ramona Tudorancea, Associate at Kramer Levin

2. The current French Market (1) • Euro PP Charter • French financial industry initiative, with support from the Banque of France and French Trésor, bringing together corporate borrowers, investors and intermediaries and endorsed by all relevant French financial industry associations (Af2i, AMAFI, AFTE, FBF, MEDEF, AFG, FFSA, GEMA2 and Paris Europlace) • set of standard documentation with proven advantages: • user-friendly, building upon existing market practices and mindful of French regulatory requirements • ready to use for unlisted, unrated and unsecured transactions, the documents can be negotiated and amended for more complex deals • the result of cross-market debates, the documents provide a fair and balanced standard between the interests of corporate borrowers and investors • part of the larger ICMA initiative to develop a pan-European PP market

3. The current French Market (1) • Recent Deals and Trends • rising interest for Euro PP financing due to simplicity and flexibility • in complement of bank loans including syndicated lending (unsecured, secured, pari passu basis) • in addition to Schuldschein financing • in replacement of bridge financing • 20-300 M€ with maturities ranging from 5 to 7-10 years • financial covenants and key clauses in line with banks • in multi-investor deals, developing key role of the Representative of the Masse acting as an agent in addition to statutory duties

4. The current French Market (2) National Regulatory Requirements /New Perspectives for Insurance Companies

5. I. Regulatory Aspects for the Issuer • Conditions to issue bonds • A decision of the Board of directors/or of the meeting of shareholders (depending on the type and the bylaws of company) (article L. 228-40 of the Commercial Code) • Two balance sheets regularly approved (article L. 228-39 of the Commercial Code) • Complete release of the capital of the company (article L. 228-39 of the Commercial Code) • Further conditions are required to issue financial instruments on regulated markets (establishment of a prospectus and summary of the prospectus, article L. 412-1 of the Financial and Monetary Code) • Conditions to enter into a loan agreement • Incorporation (legal establishment, registration etc.) • Capacity (powers of legal representative of the company) • Authorization from competent supervisory authority (the purpose of the allocation of funds shall be legal)

6. II. Regulatory Aspects for the Investors • Insurance companies’ eligible assets - Constraints • Basic Principles • The Equivalence principle: require that at any time, the value and the validity period of the assets are equal to the represented debts • The Congruence principle: the investments representing a commitment must be performed in the same currency as the one of the commitment • The Location principle: requires that assets must be located on the territory of one EU Member State

7. II. Regulatory Aspects for the Investors • Eligible Assets (Ins. Code article R. 332-2) • List of bonds eligible to the balance sheet of an insurance company • Bonds issued by one of the OECD Member State; bonds issued or guaranteed by an international public entity, provided that one or more EU Member State is part of such an entity and bonds issued or guaranteed by public collectivities of one OECD Member State (article R. 332-2 A 1°) • Bonds issued by a commercial company, provided that they are negotiated on a regulated market (R. 332 A 4°) • Other bonds issued by commercial companies(i.e.bonds that are not negotiated on a regulated market) provided that the insurance company respects the ratio de dispersion and the ratio de répartition defined in the Insurance Code (see slide 9 below), except when they are used as unit-linked life insurance policies (R. 332 A 6°)

8. II. Regulatory Aspects for the Investors • List of loans eligible to the balance sheet of an insurance company • Loans taken out by public collectivities and public institutions of OECD Member States (article R. 332 C 10°) • Mortgages to a legal person that is domiciled in one OECD Member State territory (article 332-2 C 11°) • Other loans granted to legal person domiciled on the territory of one OECD Member State (article R. 332-13 of the Insurance Code) provided that their maturity is higher than 2 years, they are guaranteed by a banking institution authorized by the supervisory authority of an EEE Member State that do not belong to the same group of the lender or the borrower (article R. 332-2 C 12° and article R. 332-13) • In the latter case, the guarantee is not required when the loan is part of a program approved by the Autorité de Contrôle Prudentiel et de Résolution (ACPR)

9. II. Regulatory Aspects for the Investors • Rules of ventilation (Ins. Code articles R. 332-3 & R.332-3-1) • The Insurance Code has established a ratio de dispersion and a ratio de repartition for each kind of assets • The ratio de répartition indicates the maximum percentage of each category of assets of the total assets of the insurance company (article R. 332-3) • The ratio de dispersion indicates within each different category of assets (bonds, loans...) the maximum percentage of each specific type of assets or type of issuer (article R. 332-3-1) • Euro-PP eligibility to the insurance company balance sheet? • Euro-PP qualifies either as a bond or as a loan (see the models of contracts drafted by CMS Bureau Francis Lefebvre, Gide LoyretteNouel and Kramer Levin). • Euro-PP (either bonds or loans) might be eligible to the balance sheet of an insurance company provided that they respect all the provisions of the French Insurance Code explained above

10. II. Regulatory Aspects for the Investors • New rules for FPE (Fonds de prêts à l’économie) • An FPE is a category of Alternative Investment Fund (AIF) created in 2013 to finance the Small or Medium Enterprises. Their portfolio of assets is managed according to specific rules of management, that are basically based on long-term strategies • FPEs are now eligible to the balance sheet of an insurance company • The decree of 17 December 2014 broadened the list of assets eligible for an FPE. It especially included : • Claims on European Union Member States • Claims on unipersonal enterprise carrying out a commercial, industrial, agricultural craft, or real estate activity • Claims on Real Estate Investment Scheme

11. III. Regulatory Aspects for Arrangers • Role of the Arranger • The Arranger is in charge of originating and identifying the potential eligible Borrowers. It negotiates the engagement letterwith the Borrower, and the Confidential Agreement, if necessary. It will also be in charge of the securities settlement and delivery on behalf of the issuer • The Arranger, is either a regulated financial intermediary, a credit institution or an investment firm and is subject to its own regulations • Obligations of the Arranger • The Arranger performs the KYC and AML due diligence and checks the conflicts of interest with respect to the borrower

12. Conclusion/ Perspectives Solvency II (SII) package is currently under progress SII leads to the global repeal of the constraints applicable to insurance companies type of assets Substantial changes in the way of providing insurance services