As a result of the ongoing credit crisis, governments across the world have taken, and continue to take, a variety of extraordinary measures to protect the financial sector and prevent a more severe recession (to read more about the various measures taken to date by governments around the world, click here).

One of these measures has been the Temporary Liquidity Guarantee Program (TLGP) of the US Federal Depositary Insurance Corporation (FDIC), under which senior unsecured debt issued between 14 October 2008 and 30 June 2009 by eligible participating entities will be fully and unconditionally guaranteed by the FDIC until 30 June 2012.

On 24 November 2008, the Securities and Exchange Commission (SEC) stated that such debt will be considered to have been guaranteed by an instrumentality of the United States. Accordingly, the debt may be issued without SEC registration under Section 3(a)(2) of the Securities Act of 1933, as amended (Securities Act). As a result, issuances of TLGP-guaranteed debt will not have to be made under an effective registration statement, and will not be subject to certain laws regarding disclosure liability (such as Section 11 of the Securities Act).

Offerings may, however, also be made under an effective registration statement and many issuers have chosen to do so.

Issuers should be aware that public offerings of FDIC-guaranteed debt in Europe (for example, under a global offering or an offering limited to Europe) will be subject to the Prospectus Directive (Directive 2003/71/EC). This requires the publication of a prospectus where securities are offered to the public and/or admitted to trading in Europe. No exemptions are available from these requirements in respect of non-equity securities guaranteed by a non-EEA country or an agency or instrumentality of a non-EEA country (such as the FDIC).

As a result, unless the issuance, offer and sale by an issuer of FDIC-guaranteed debt in Europe is limited to "qualified investors" within the meaning of the Prospectus Directive, or is conducted according to other applicable exemptions under it, appropriate sovereign disclosure with respect to the guarantor must be prepared and included in the relevant prospectus. This would include the requirement to include audited historical financial information of the guarantor (which would raise issues as neither the FDIC nor the US Federal Government makes such financial statements available). Issuers may seek a derogation from some of these requirements from the relevant authority from which approval is being sought, but these will be considered on a case-by-case basis.

In practice, however, the authors expect offers and sales of such securities to be conducted under available exemptions from the prospectus requirements set out in the Prospectus Directive.