New German bonds question second-lien

Author: Danielle Myles | Published: 19 Jan 2011

The latest high-yield issue under the new German Bond Act adopts an issuer-friendly structure that calls into question the preference for second-lien over unsecured debt.

It also marks the opening of the market for the country’s mittelstand (small and mid-sized companies) – a mainstay of the German economy.

Robotics manufacturer Kuka’s €202 million second-lien offering, the first of its kind under the 2009 Act, is part of a larger refinancing that includes a €200 million syndicated senior loan.

The relatively small issue amount and its sale outside the prospectus directive, combined with the comfort of domestic law, shows these companies are no longer priced nor sized-out of the high-yield market.

"It could be one of these landmarks that show that mid-sized companies with a sub-investment grade rating like Kuka...