Published by a LexisNexis Restructuring & Insolvency expert
Practice notes
Article Summary
This practice note provides an overview of bonds and notes, which are used interchangeably but with notes tending to have shorter maturities. Bonds are typically held by institutional investors and traded freely on the open market, making bondholders more diverse and difficult to identify than bank lenders. The note outlines key characteristics of bondholders, including their varying motivations depending on when and at what price they acquired the bonds. It summarises the structure of a bond issue, including the global certificate issued to a depositary who is the registered holder, with the ultimate beneficiaries unknown to the issuer. The key documents in a bond issue are described, including the indenture containing terms like maturity, interest rates, credit rating, and majority action clauses for amending terms. The ranking of bonds within the overall capital structure is covered, with bonds junior to senior secured debt. The potential role of a bondholder trustee is explained, along with the option for bondholders to form ad hoc committees. Finally, the emergence of senior secured bonds is noted, with typical terms including pari passu ranking and limited enforcement rights. The overview explains bonds and notes at a high level for legal practitioners.
Access this content for free with a 7 day trial of LexisNexis and benefit from:
- Instant clarification on points of law
- Smart search
- Workflow tools
- 41 practice areas
Get your quote today and take step closer to being able to benefit from:
- Instant clarification on points of law
- Smart search
- Workflow tools
- 36 practice areas
Get a LexisNexis quote
* denotes a required field
To view the latest version of this document and thousands of others like it,
sign-in with LexisNexis or register for a free trial.
