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Covenant Review Launches Investment Grade Research Service.

Founder Adam Cohen Says: "It's Time For Changes In The High Grade Market"

NEW YORK -- For the first time, high grade bond investors can receive hours of insightful analysis on the structure of new bond offerings delivered to them pre-pricing -- all in layman's terms -- neatly packaged in a clear and concise report and from which they can take away the important points in just minutes. Covenant Review's new service highlights the loopholes that have been used against bondholders for years, preventing bondholder surprises that so often crater performance. Covenant Review also provides event-driven analysis and looks at the entire capital structure - providing access to both previously written research and delivering timely reports concerning the likely impact of LBOs, additional financings, and other issuer actions that affect bondholders' interests. The new service launches on September 20, 2010 and already includes research on over 250 high grade, split-rated, and fallen angel issuers.

Adam Cohen, founder of Covenant Review, says: "For too long the corporate bondholder has been under the impression that covenant changes cannot be made, and they have been forced to accept offerings with take-it-or-leave-it covenants that cannot be negotiated. We are lifting the veil on this belief, in an effort to better serve the investment community."

How does Covenant Review do this? The analysts are practicing attorneys with extensive corporate finance experience at some of New York's largest law firms. As Cohen explains: "We are the lawyers who used to write these kinds of loopholes and help private equity firms exploit those loopholes for LBOs. That makes us the guys you want on your side to find and help you correct structural problems with investment grade bonds."

The service quickly puts the corporate bond buyer in an educated position when they need to decide on a new deal. "New issue roadshows practically don't exist for investment grade issuers, and marketing has dwindled down to no more than a few hours at best," Cohen laments. "How can anyone who does not have a legal background dissect and decode these covenants and the law that governs them in such a short period of time? The truth is, they can't. Our team has read thousands of prospectus and indenture documents so we can quickly identify problems and warn investors. For an asset manager to understand the contract for the bond it is buying is part of fulfilling a fiduciary duty to fund investors. We provide the solution."

Covenant Review's high grade service gives buyers a precise list of objections that can be brought to the underwriters without improperly communicating amongst each other. This way, every investor is speaking for themselves, but the underwriters can't tell them "no one else complained about this." The service empowers buyers to resist and change the defective bond covenants in new offerings.

A succinct "First Look" report covering most new issues identifies covenant problems before a purchase decision has been made. Most high grade and split-rated issuers are covered upon new issue.

Analyst Alexander Diaz-Matos comments: "We've been opportunistically helping our subscribers, which include both long-only and hedge fund clients, position trades on LBOs like Clear Channel, Harrah's, HCA, and TXU since 2006. Launching a dedicated high grade service will broaden the amount of clients that we can help avoid being stung in the next round of LBOs." Cohen elaborates on the reality of this risk: "The pending acquisition of Pactiv by Reynolds is yet another example of how informed bondholders could have prepared against the loss from the buyout. Some of those bonds are down over 20 points because of the weak bond covenants - and we had warned investors about this back in April. So now we're helping investors to understand their existing bond portfolios and also to improve new bond issues."

Cohen continues: "Of course, we are working against the myth that bond covenants don't change for high grade bonds. But when I founded Covenant Review in 2005 to help high yield investors, we were told that high yield bonds also could never change. That's not true anymore. We are frequently told that by giving investors the tools they need to fight back, productive conversations are now effective with underwriters in changing the structure of high yield new issues. Now investment grade managers have the tool they need, and it is time for high grade covenants to change, too."

About Covenant Review

Covenant Review creatively analyzes the indentures, credit agreements, and other contracts that determine creditor rights for high yield and high grade investors. Founder Adam Cohen is the leading authority on corporate bond covenants. He established the Company in 2005 after a prior career in law and investment banking. For further information please visit
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Publication:Business Wire
Geographic Code:1U2NY
Date:Sep 20, 2010
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