Click here to download the High-yield debt 2019 report, published by Getting the Deal Through.

Jurisdictions covered

The following 11 jurisdictions are covered in this report:

Brazil; China; Finland; France; Greece; Portugal; Russia; Spain; Switzerland; United Kingdom; United States

Questions

The set of questions relating to the topic of high-yield debt and answered by the guide for each jurisdiction covered include:

Market overview

• • Discuss the major differences between high-yield debt securities and bank loans in your jurisdiction. What are some of the critical advantages and disadvantages?
• • Are you seeing increased regulation regarding either high-yield debt securities or bank loans in your jurisdiction?
• • Describe the current market activity and trends in your jurisdiction relating to high-yield debt securities financings.
• • Identify the main participants in a high-yielding debt financing in your jurisdiction and outline their roles and fees.
• • Describe any new trend as they relate to the covenant package, structure, regulatory review or other aspects of high-yield debt securities.

Documentation terms

• • How are high-yield debt securities issued in your jurisdiction? Are there particular precedents or models that companies and investors tend to review prior to issuing the securities?
• • What is the typical maturity and call structure of a high-yield debt security? Are high-yield securities frequently issued with original issue discount? Describe any yield protection provisions typically included in the high-yield securities documentation.
• • How are high-yield debt securities offerings launched, priced and closed? How are coupons determined? Do you typically see fixed or floating rates?
• • Describe the main covenants restricting the operation of the debtor’s business in a typical high-yield debt securities transaction. Have you been seeing a convergence of covenants between the high-yield and bank markets?
• • Are you seeing any tightening of covenants or are you seeing investor protections being eroded? Are terms of covenants often changed between the launch and pricing of an offering?
• • Are there particular covenants that are looser or tighter, based on a particular industry sector?
• • Do changes of control, asset sales or similar transactions typically trigger any prepayment requirements?
• • Do you see the inclusion of “double trigger” change of control provisions tied to a ratings downgrade?
• • Is there the concept of a “crossover” covenant package in your jurisdiction for issuers who are on the verge of being investment grade? And if so, what are some of the key covenant differences?

Regulation

• • Describe the disclosure requirements applicable to high-yield debt securities financings. Is there a particular regulatory body that reviews or approves such disclosure requirements?
• • Are there any limitations on the use of proceeds from an issuance of high-yield securities by an issuer?
• • On what grounds, if any, could an investor be precluded from investing in high-yield securities?
• • Are there any particular closing mechanics in your jurisdiction that an issuer of high-yield debt securities should be aware of?

Guarantees and security

• • Outline how guarantees among companies in a group typically operate in a high-yield deal in your jurisdiction. Are there limitations on guarantees?
• • What is the typical collateral package for high-yield debt securities in your jurisdiction?
• • Are there any limitations on security that can be granted to secure high-yield securities in your jurisdiction? Are there any limitations on types of assets that can be pledged as collateral? Are there any limitations on which entities can provide security?
• • Describe the typical collateral structure in your jurisdiction. For example, is it common to see crossing lien deals between high-yield debt securities and bank agreements?
• • Who typically bears the costs of legal expenses related to security interests?
• • How are security interests recorded? Is there a public register?
• • How are security interests typically enforced in the high-yield context?

Debt seniority and intercreditor arrangements

• • How does high-yield debt rank in relation to other creditor interests?
• • Describe how intercreditor arrangements entered into by companies in your jurisdiction typically regulate voting and control between holders of high-yield debt securities and bank lenders?

Tax considerations

• • May issuers set off interest payments on their securities against their tax liability? Are there any special considerations for the high-yield market?
• • Is it common for issuers to obtain a tax ruling from the competent authority in your jurisdiction in connection with the issuance of high-yield bonds?