HY bondholders still losing their rights

Author: Lizzie Meager | Published: 26 Nov 2015

While bondholders’ rights have vastly improved since the early 2000s, the continuing convergence of term loan B products and high yield instruments is reversing the progress made.

Panellists at a breakfast seminar hosted by Orrick Herrington and Sutcliffe earlier this month said that at this stage in the economic cycle, bondholders are losing out. Low interest rates and quantitative easing have both afforded sponsors a better position for negotiation.

"As a bondholder, you really don’t get much," said Justin Holland, managing director at investment bank Gleacher Shacklock. "You’re taking a significant leap of faith, and while the situation is improving, there’s still a long way to go."

Stephen Phillips, partner and co-head of European restructuring at Orrick, agreed. "Bondholders’ influence via increased voting rights has improved since the market opened,...