If an issuer or its guarantor suffers from a credit rating downgrade such that it no longer meets the eligibility requirements in the Listing Rules, what would happen to its outstanding warrants and CBBCs?

The issuer’s existing warrants and CBBCs are still valid and you can continue to trade them through the Exchange trading system. The issuer must publish an announcement regarding the credit rating downgrade and continue to provide liquidity for its existing structured products and perform its settlement obligations upon expiry.

You should be cautious that prices of warrants or CBBCs issued by the affected issuer may be affected by its or its guarantor’s credit downgrade.

However, when an issuer no longer meets the eligibility requirements in the Listing Rules, the issuer will not be allowed to launch new issues or further issues. It must apply for the withdrawal of warrants and CBBCs launched but not yet listed and all warrants and CBBCs with no outstanding positions held by the public.