Overview

With our global network, we can field teams of lawyers with experience advising issuers and underwriters on high-yield bond offerings in numerous jurisdictions across the Americas, Asia and Europe. Our high-yield lawyers work closely with lawyers in our market-leading banking, structured finance, restructuring and debt capital markets practices and can handle all aspects of high-yield debt offerings, including negotiating complex covenant packages, handling subordination, security and intercreditor issues and advising on bridge-to-bond financings, bank-to-bond financings and restructurings.

Traditional reasons for high-yield offerings include:

  • Established companies that do not carry (or have lost) an investment grade rating (i.e. rated Ba 1/ BB+ and below by Moody’s and S&P, respectively)
  • Private companies looking to reorganize their capital structure
  • Financings for leveraged buy-outs

Issuers of high-yield bonds can benefit from long-term debt financing with covenants that are typically less onerous than the standard covenants included in a traditional credit facility. Investors can benefit from higher interest rates and the potential for capital appreciation.

The ideal candidate for a high-yield bond exhibits some or all of the following characteristics:

  • A stable and resilient business model/financial track record and/or growth/recovery story
  • Market leading positions and favorable industry trends/growth prospects
  • An experienced management team with a proven track record
  • Solid cash generation and future deleveraging potential
  • Financing needs of at least €150 million to €200 million and with limited bank financing available
  • The proceeds prospects of the offering are to be used for refinancing of existing indebtedness, acquisition financing or (defined) general corporate purposes

High-yield bonds are generally structured to be junior to bank debt, i.e., they will either be expressly subordinated (“Subordinated Notes”) or effectively subordinated (but still referred to as “Senior Notes”).

If you would like to learn more about high-yield bonds, please click on the link below to view a PDF of the 4th European Edition of our High-Yield Bonds – An Issuer’s Guide or request a hard copy here. As with earlier editions, the Guide is primarily intended for (first-time) issuers of high-yield bonds. We, therefore, did not assume that users of the Guide would already have prior experience with or even a basic understanding of high-yield bonds, and we have explained the relevant high-yield bond concepts in simple non-technical terms, wherever possible. However, we still hope that other market participants (such as underwriting banks, law firms or other financial and legal advisers) will also find the Guide interesting and helpful.

Download High-Yield Bonds - An Issuer's Guide (4th European Edition)

Highlights
High-Yield Bonds in Asia - What Every Issuer Needs to Know (Part 2: General Principles of a High-Yield Covenant Package)
High Yield Bonds - An Issuer's Guide (4th European Edition)
High-Yield Bonds in Asia - The Complete Issuer's Guide (Second Edition)

Experience

Recent high yield bond offerings on which Mayer Brown lawyers have advised include:

  • Halcón Resources Corporation, a Houston-based independent E&P company, on its offering of $700 million of 8.625% senior secured notes due 2020.
  • Progroup AG, a leading producer and supplier of containerboard and corrugated board in Central Europe, and its controlling shareholder, JH-Holding GmbH, on an offering of €250 million of 5.125% senior secured fixed rate notes and €150 million senior secured floating rate notes by Progroup AG, and €125 million 8.25%/9.00% PIK toggle notes by JH-Holding Finance SA—all due 2022. The notes were governed by German law and listed on the Euro MTF market of the Luxembourg Stock Exchange. The JH-Holding issue was the first PIK offering in Europe in 2015 and the first German law governed PIK offering ever.
  • Isle of Capri Casinos on its cash tender offer and consent solicitation for a series of its outstanding high yield notes, as well as the company’s current offering of $150 million of new 5.875% Senior Notes due 2021, the proceeds of which were used to finance the tender offer.
  • The initial purchasers on an offering of $250 million aggregate principal amount of 5.375% Senior Notes due 2025 by Oshkosh Corporation, a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies.
  • Bonanza Creek Energy, Inc., an independent energy company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States, on its SEC-registered offering of $300 million 5.75% senior unsecured notes due 2023.
  • Barclays Capital Inc.  and the several underwriters on the SEC-registered offering and issuance by Regency Energy Partners LP and Regency Energy Finance Corp. of $700 million aggregate principal amount of 5.00% senior notes due 2022.
  • Wilmington Trust, as note trustee and security agent, in connection with a high yield notes offering by TES Finance plc of £200,000,000 aggregate principal amount of 6.75% senior secured notes due 2020 and £100,000,000 aggregate principal amount of senior secured floating rate notes due 2020.
  • Wilmington Trust (London) Limited), as security agent, and the lenders under the senior revolving credit facility in connection with the offer by Ideal Standard International S.A. to exchange any an all of its outstanding €275,000,000 11.75% Senior Secured Notes due 2018 for A-tranche 15.75% Priority PIK Senior Secured Notes due 2018, B-tranche 15.75%/11.75% PIK Toggle Senior Subordinated Secured Notes due 2018 (without option), B-tranche 15.75%/11.75% PIK Toggle Senior Subordinated Secured Notes due 2018 (with option) and C-tranche 17.75%/11.75% Equity Linked PIK Toggle Secured Notes due 2018 and certain equity interests, and the related consent solicitation.
  • Barclays Capital Inc. as dealer-manager and solicitation agent in Regency Energy Partners LP’s offer to exchange Eagle Rock Energy Partners, L.P.’s $550 million of outstanding senior unsecured notes into an equivalent amount of Regency senior unsecured notes.
  • New Gulf Resources, LLC, an Oklahoma-based oil & gas exploration and production company, on concurrent private high-yield notes offerings of $365 million 11.75% senior secured notes due 2019 and $135 million subordinated payment-in-kind (PIK) toggle notes due 2019 with warrants.
  • Ocwen Financial Corporation, one of the largest mortgage companies in the United States, in connection with its debut high yield notes offering of $350 million aggregate principal amount of 6.625% senior notes due 2019.
  • An Asian-based real estate investment fund on an exchange of two outstanding bonds and a term loan for new secured high yield PIK notes with certain upside equity rights in respect to a South Asian residential real estate development fund and a complex security structure involving collateral in Cyprus, Mauritius and the U.K.
  • The initial purchasers in connection with an offering of $350 million 6% senior notes due 2022 by Exterran Partners, L.P. and EXLP Finance Corp.  Exterran provides natural gas contract operations services to customers throughout the United States.
  • The underwriters in connection with an offering of $900 million 5.875% senior notes due 2022 by Regency Energy Partners LP and Regency Energy Finance Corp.  Regency is engaged in the gathering and processing, compression, treating and transportation of natural gas and the transportation, fractionation and storage of natural gas liquids.
  • The initial purchasers in connection with an offering of $250 million 5.375% senior notes due 2022 by Oshkosh Corporation, a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies.
  • Halcón Resources Corporation, an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the United States, on a $400 million tap offering of its 9.75% senior unsecured notes due 2020.
  • WEPA Hygieneprodukte GmbH, a leading European tissue producer, on a €52 million tap offering of its 6.50% Senior Secured Notes due 2020 pursuant to Regulation S and Rule 144A and on the listing of the notes on the Euro MTF market of the Luxembourg Stock Exchange.
  • Bonanza Creek Energy, Inc. in connection with its SEC-registered offering of $200 million of its 6.75 % Senior Notes due 2021.
  • Plastipak Holdings, Inc., a leading global designer, manufacturer and supplier of plastic packaging containers and preforms, in connection with its offering of $375 million of 6.50% Senior Notes due 2021.
  • Halcon Resources Corporation in connection with its offering of $300 million 9.25% Senior Notes due 2021.
  • Novalis S.A.S., the laundry services provider, and its parent company, French private equity fund Eurazeo, on the financing, corporate and tax aspects of Novalis’ €1.9 billion debt restructuring, which included an amendment and extension to its senior debt and a €450 million Senior Secured Notes offering pursuant to Rule 144A and Regulation S.
  • ION Geophysical Corporation in connection with its offering of $175 million 8.125% Senior Secured Second Priority Notes due 2018.
  • WEPA Hygieneprodukte GmbH, a leading European tissue producer, on its inaugural €275 million offering of 6.50% Senior Secured Notes due 2020 pursuant to Regulation S and Rule 144A and on the listing of the notes on the Euro MTF market of the Luxembourg Stock Exchange.
  • Bonanza Creek Energy, Inc. in connection with its offering of $300 million 6.75% Senior Notes due 2021.
  • The initial purchasers in connection with the offering of $350 million 6% Senior Notes due 2021 by Exterran Partners, L.P.
  • Isle of Capri Casinos, Inc. in connection with its offering of $350 million 5.875% Senior Notes due 2021.
  • PT Indika Energy Tbk in connection with the offering of US$500 million 6.375% Senior Notes due 2023 by Indo Energy Finance II B.V. The transaction represents the first Indonesian issuer within the “single-B” ratings category to complete a 10-year US dollar-denominated bond offering.
  • Isle of Capri Casinos, Inc. in connection with its offering of $350 million 8.875% Senior Subordinated Notes due 2020.
  • The initial purchasers in connection with the offering of $650 million 6.625% Senior Notes due 2019 by Chesapeake Oilfield Operating LLC.
  • Wilmington Trust as security trustee and facility agent in connection with a €250 million Senior Notes offering by Ideal Standard International S.A. pursuant to Rule 144A and Regulation S and a €15 million revolving credit facility.
  • Sifco S.A. in connection with its offering of $75 million 11.5% Senior Secured Notes due 2016 under its $300 million Global Median Term Note Program.
  • The initial purchasers in connection with the offering of $500 million 6.5% Senior Notes due 2021 by Regency Energy Partners LP and Regency Finance Corp.
  • PT Indika Energy Tbk and Indo Energy Finance B.V. in connection with the exchange offer of up to US$185 million of Indo Integrated Energy B.V.'s 8.50% Senior Notes due 2012 for Indo Energy Finance B.V.'s 7.00% Senior Notes due 2018, together with simultaneous consent solicitations for the 2012 Notes and Indo Integrated Energy II B.V.'s 9.75% Senior Notes due 2016 and new money issue of US$115 million.
  • PT Indika Energy Tbk and Indo Integrated Energy II B.V. in connection with the offering by Indo Integrated Energy II B.V. of US$230 million 9.75% Senior Notes due 2016, including "high-yield" covenants, pursuant to Rule 144A and Regulation S and in connection with the successful consent solicitation related to Indo Integrated Energy B.V.'s US$250 million 8.50% Senior Notes due 2010, including substantial covenant adjustments necessitated by a significant proposed acquisition and waivers to provide enhanced flexibility for proposed acquisition activity and other corporate actions.
  • Isle of Capri Casinos Inc. in connection with its offering of $300 million 7.75% Senior Notes due 2019.
  • Wilmington trust as security trustee and agent in connection with a $520 million Senior Notes offering by Almatis Holdings 9 BV pursuant to Rule 144A and Regulation S and a $50 million revolving credit facility.
Asia