Voting uncertain in new European high yield

Author: Danielle Myles | Published: 24 Mar 2011

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...