High yield bonds in Asia are getting a makeover with extra covenants more typical to loans. As Chandra Asri’s $230 million bond last week showed, investors want credit enhancement and won’t buy unless they get it.
Chandra Asri approached the market twice in 2009 but decided to rethink the structure of its five-year note after a frosty reception from potential investors. As well as standard debt-incurrence covenants, Chandra Asri added maintenance-style covenants to the documents, and amortisation.
“This is a tough time for issuers of high yield bonds,” said Alex Lloyd of Clifford Chance. “There’s demand from investors but it’s cautious demand so companies that want to get the deal away need to find...