Non-call protections in fixed rate international high yield bonds have been historically unpopular with sponsors and corporates, who want greater refinancing 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.
During recent years, flexible options have been introduced, such as floating rate high yield bonds, portability features, and more relaxed restricted payment provisions. Yet still, non-call periods are included in almost all fixed rate offerings. With the shift towards term loan B in Europe and beyond, historically low interest rates and other factors, is it time to consider variations? Baker McKenzie’s Rob Mathews and Haden Henderson took a closer look at this for a recent article published in IFLR.