Carlson Wagonlit’s benchmark European offering has confirmed market consensus on high yield’s ability to control enforcement. But the deal has revealed dissatisfaction on a key point.
In recent years there has been tension in intercreditor arrangements between the rights of revolving banks and high yield noteholders.
The banks are senior in priority of recovery on collateral, but hold a relatively small part of the capital structure. The noteholders recover from collateral after the revolving banks, but form a much larger portion of the debt capital.
“In the case of senior secured notes, high yield noteholders want the vote and the ability to control enforcement,” said Wayne Rapozo of Dechert’s London practice, who led the corporate team on the deal.
“They don’t want to be subject to standstills and restrictions on their ability to vote, especially because they are...