UPC Broadband (UPCB) is the latest issuer to use
Europe’s new high yield structure which features
the maintenance covenants of an underlying secured loan. But
the deal offers no sign of bondholder voting mechanisms
standardising under the structure.
In January, Liberty Global’s
subsidiary raised €750 million in Europe’s
high yield market to fund a new loan under its senior credit
facility. This was followed 17 days later by its $1 billion
issue in the US market for the same purpose.
The notes are issued through separate SPVs which
on-lend the proceeds into UPCB’s bank facility. In
effect the SPVs step into a bank’s shoes under
that facility, effectively converting the high yield proceeds
into a loan.
"This basically allowed the issuer to tap a very hot market
to reduce debt that was...