Talking point - Investment-grade bond covenants

Rob Orman

Head of investment-grade corporate research, RBS, London

Covenant protection does need strengthening and we need to focus on upgrading the negative pledge and improving the wording of the change-of-control clause.

Starting with the negative pledge, subsidiary borrowing is an obvious weakness of both US and European investment-grade bond documentation. However, in Europe the standard negative pledge clause in most investment-grade bonds is even weaker, allowing issuers to grant unlimited s

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