German high yield

Author: Danielle Myles | Published: 20 Feb 2011

German companies are now embracing the high yield market. Issuers can sell bonds with traditional high yield covenants and terms, structured in either New York or German law, following the amendment to the German Bond Act.

Before the amendment to the Act, issuers could not demand an indenture by way of majority votes of the bondholders. Because of this, the German law was not considered internationally competitive. The August 2009 amendment changed this, and now indentures can be provided for by way of majority votes.

As well as allowing amendments to bond terms with majority bondholder consent, the changes also introduced the idea of a common bondholder representative. Continental’s €750 million senior secured notes in June 2010 were the...