Will Your High Yield Bond Fall Through This Trap Door?
by Robert Smith of the Financial Times
The Junk Bond ‘trap door’ your next investment might fall through. Just another effect of low rates for longer.
High-yield investors successfully pushed Superior Industries to strip out a controversial clause in a debt sale on Thursday, marking a rare victory for bond buyers in their tussle with sellers over aggressive deal terms.
The clause would have allowed the US car parts maker’s “restricted subsidiaries” to make investments in “unrestricted subsidiaries” — which would pass value from entities that bondholders have control over to those outside of their reach.