How lawyers will shape Asian high-yield

Author: Ashley Lee | Published: 14 Nov 2012
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Lawyers are set to play an important role in shaping disclosure standards in high-yield in Asia, as new market developments facilitate their further involvement.

Panelists at a high-yield conference co-sponsored by Asia Securities Industry & Financial Markets Association (Asifma) and Latham & Watkins said that due to the lack of regulatory oversight on the instrument the market essentially sets the standards itself.

Market participants warned that issues need to be of a high quality to continue to attract investors, and that they bear responsibility for protecting Asia’s nascent high-yield markets.

“It’s incumbent that those of us in the room who work with this product apply the right level of rigour – we are the gatekeepers, we need to make sure that the process is done right,” said Clifford Chance’s Michael Dakin.

Latham & Watkins’ Bryant Edwards, a former chair of the European High Yield Association, said that the market itself set the high disclosure and accounting standards for high-yield issues; there is little substantive regulation. Furthermore the deals are never registered with the Securities and Exchange Commission (SEC) and they are generally listed on the unregulated side of exchanges.

“The instrument has been developed through an ongoing dialogue between investors and issuers utilising lawyers and investment bankers as intermediaries,” Edwards commented. “The market relies on lawyers, underwriters and advisors to deliver international best practices in structuring, accounting and disclosure.”

To establish such standards, panelists agreed that there must be more dialogue about high-yield to further develop the market.

Many panelists mentioned the discourse prompted by establishment of the European High-Yield Association as a key reason for the rise of high-yield in Europe. Similar development could soon begin in Asia.

Mark Austen, CEO of Asifma, said Asifma was currently exploring member interest in creating a high yield committee in the near future, which would hopefully result in further development of the high-yield market

For more please attend IFLR’s Asia Capital Markets Forum this Thursday, November 15. More details can be found here: http://www.iflr.com/ACM2012

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