High-Yield Bonds In Asia - The Complete Issuer's Guide (Second Edition)

High-Yield in Context

High-Yield Bonds Compared to Traditional Bank Financing

High-yield bonds (or notes) provide companies with the benefits associated with long-term debt financing but with covenants that are typically less onerous than standard credit facility covenants. In addition, the covenant package can be self-administered rather than requiring an ongoing dialogue with creditors or regular inspections by a bank lender. The high-yield bond covenant package largely does not include traditional bank financing maintenance covenants, which require that the Issuer maintain a certain financial health or the lenders can call or accelerate the loans. Instead, the high-yield covenant package includes incurrence covenants, which are evaluated only when the Issuer (or any of its Restricted Subsidiaries) seeks to take some action such as incurring indebtedness, paying a dividend or making an investment.