Bond covenant standards are inappropriate say corporate issuers

Issuers have rejected a call by bond investors to standardise the covenants used in European corporate bonds. The UK’s Association of Corporate Treasurers yesterday said that the proposals by a consortium of bond investor bodies were “inevitably biased in favour of investors”. It added that the package of standard covenants was more suitable for leveraged loans than for investment grade corporate bond issues. Covenants suggested as standard under the proposal include negative pledge, change of control and disposal of asset clauses.