DR News: Unsponsored DRs Abound Amid Lack Of New Issues


By Gordon Platt

The market for new sponsored depositary receipt programs for companies in emerging markets has dried up since the equity market turmoil in August, but there has continued to be a steady stream of new unsponsored DRs that trade in the over-the-counter market.

Unsponsored DRs are issued by depositary banks without a formal agreement with the company for whom the DRs are issued.

BNY Mellon alone announced 16 new unsponsored DRs from emerging markets in September and October. It opened four new unsponsored DR programs for Thai companies in October—enabling investors to trade DRs of Bank of Ayudhya, Krung Thai Bank, Pruksa Real Estate and TMB Bank in the OTC market.The bank also launched unsponsored programs for Turkish companies Koza Altin Iletmeleri, a mining company, and petrochemical firm Petkim. Citi began an unsponsored DR program for Türkiye Vakiflar Bankasi. Deutsche Bank opened unsponsored DRs for Globe Telecom, based in the Philippines, and Mr. Price Group, a South African retailer.

Among the other unsponsored DRs initiated by BNY Mellon recently are: Egis Pharmaceuticals in Hungary; Guotai Junan, a Chinese securities company; PGE Polska Grupa Energetyczna, Poland’s largest power utility; Lamprell, a UAE company that specializes in oil rigs and engineering services; and Soriana, Mexico’s largest retailer.

The number of unsponsored programs has surged since October 2008, when the US SEC adopted new rules that made it easier to create them.