Treasury took a conservative approach to streamlining disclosure and liability requirements for retail bond issuers in a discussion paper issued yesterday.It proposes that eligible issues - so-called "vanilla bonds" - be investment grade; be for terms of no more than 10 years; and have a minimum issue size of A$50 million.The Government wants to promote the development of a listed retail corporate bond market. It hopes to do this by creating a new class of prospectus.This issue has been around for a while. It goes back to the 2009 Johnson Report, which recommended that the regulatory requirements for listed companies that issue high-quality corporate debt to retail investors be reduced.Currently, issuers of retail corporate bonds must issue a full prospectus unless they qualify for ASIC's "vanilla bonds" class order relief. According to the discussion paper, only one issuer has used that relief, although a few others have modelled retail bond offer documents on the class order.In December last year, as part of its banking reform package, the Government asked Treasury to look at how it could align disclosure for retail corporate bond issues with the process already allowed for share entitlement offers.The aim is to strike the right balance between investor protection and a reduction in transaction and regulatory costs for issuers.The Treasury paper proposes that issuers should be permitted to produce either a single simplified prospectus or a multi-stage disclosure comprising a base document and a term sheet or cleansing statement.Eligibility requirements would include issuers having continuously quoted securities and the bond being a quoted security. ASIC would have the discretion not to allow issuance via a shorter prospectus.To be considered "vanilla bonds" the securities would have to be denominated in Australian dollars, be for a fixed term with a fixed or floating rate, and with interest payable at maturity or else paid periodically. The bonds could not be converted into any other security. The bond would also have to be guaranteed by the listed parent company if issued by a wholly owned financing subsidiary of the company.Other proposed requirements include a minimum issue size of $50 million to enhance liquidity, a prohibition on subordination, a prohibition on deferral of interest, and a maximum term of 10 years.One consideration is a limitation on eligibility for investment grade issues, although the paper notes that this would exclude most potential small- and medium-sized business issuers.