Non-call periods for fixed rate high yield: time to reconsider?

Author: | Published: 26 Feb 2019

Non-call protections have never been popular with sponsors and corporates, but an investors’ market has kept them around. Baker McKenzie lawyers Rob Mathews and Haden Henderson question if now is the time for that to change

Substantially, all fixed rate international high yield bonds include a non-call period during which the bonds can only be redeemed at a prohibitive make-whole premium. This limitation has been historically unpopular with sponsors and corporates who want greater flexibility, particularly when buying or selling a company or to more aggressively de-lever on an IPO. On the other hand, these provisions are equally important to investors who want to build portfolios with clear visibility on returns....