High yield portability becomes more aggressive

Author: Danielle Myles | Published: 13 Jun 2013
  • Twenty European high-yield deals this year have featured portability;
  • Portability clauses allow the issuer, in certain circumstances, to waive bondholders’ change of control rights;
  • It is being pushed by private equity-owned issuers, not corporate issuers;
  • Some issuers have managed to have their super senior revolving credit facilities also include portability;
  • There is minimal investor pushback, and the trend is tipped to continue at least until the market’s summer hiatus in two months;
  • JC Flowers’ acquisition of Cabot Financial, which has issued portable bonds, will be the first test of the clause.

Portability has become a hallmark of Europe’s 2013 high-yield market, and the lack of investor pushback suggests it is here to stay.

Some issuers with bond-dominated capital structures have pushed portability into their super senior...