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100916_28253 Corporate Bond Covenant Guide - Remus Negoita A4_F:Layout 1

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European Credit Research


September 2010

Philippe Landroit is a fixed income credit analyst who covers the Autos, Consumer Services and Industrials sectors.
He began his investment banking career in 1999 and joined HSBC in May 2002. Philippe gained his Chartered Financial
Analyst (CFA) designation in 2003.

Corporate Bond Covenants

Philippe Landroit, CFA


Analyst
HSBC Bank Plc
+44 20 7991 6864
philippe.landroit@hsbcgroup.com

Corporate Bond Covenants


The Guide

Paul Lee
Analyst
HSBC Bank Plc
+44 20 7991 5912
paul.h.b.lee@hsbcib.com
Paul Lee is a fixed income analyst covering the Consumer Goods and Retail sectors. He began his investment banking
career with HSBC in 2006, having completed his Masters degree from the University of Cambridge in 2004.

Laura Maedler is a fixed income analyst covering the Telecoms sector. She began her investment banking career in
2006 working in M&A Advisory and joined HSBC in January 2010. Laura completed her Masters degree at the
University of Edinburgh in 2005.

European Credit Research

Laura Maedler
Analyst
HSBC Bank Plc
+44 20 7991 6790
laura.maedler@hsbcib.com

Remus Negoita
Analyst
HSBC Bank Plc
+44 20 7991 5975
remus.negoita@hsbcib.com
Remus joined HSBC Global Research in September 2007 after receiving a Masters from the University of Paris
Pantheon-Assas. He currently focuses on the Autos and Industrials sectors.

Rodolphe Ranouil, CFA


Analyst
HSBC Bank Plc
+44 20 7991 6855
rodolphe.ranouil@hsbcgroup.com
Rodolphe Ranouil, covers utilities, energy and infrastructure credits. He began his career with CCF in 1997 and joined
the Paris credit research team in 1999. He relocated to London in 2001. Rodolphe earned his Chartered Financial
Analyst (CFA) designation in 2003.

Zoe D Vu
Analyst
HSBC Bank Plc
+44 20 7991 5915
zoe.d.vu@hsbcib.com
Zoe joined the European credit research team in September 2009 after initially joining Global Research in September
2008 on the graduate programme. She worked in the EMEA Equity Research team covering Utilities and Global
Economics team prior to her current role. Zoe has a bachelors degree in Investment and Financial Risk Management
from Cass Business School, London.

*Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is not registered/qualified pursuant to FINRA regulations.

By Philippe Landroit, Paul Lee, Laura Maedler,


Remus Negoita, Rodolphe Ranouil and Zoe D Vu

September 2010

Disclosures and Disclaimer This report must be read with the disclosures and analyst
certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

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European Credit Research


Corporate Bond Covenants
September 2010

Contents
Preface
Autos, Industrials &
Infrastructure
Aerospace & Defence, Auto Parts, Capital Goods
Autos
Building Materials & Construction
Chemicals and Pharma
Diversified Industrials & Business Services
Infrastructure
Metals & Mining
Oil & Gas
Paper
Property
Transport

Consumer, Retail & Tobacco


Food and Beverages
Consumer Services
Personal & Household goods
Retail
Tobacco

Telecoms & Media


Media & Technology
Telecoms

5
7
35
67
87
125
149
171
187
207
211
225

235
237
261
275
283
315

Utilities
Electric
Gas
Water

329
331
353

399
401
489
511

Hybrids

561

Glossary

585

Company Index

591

Disclosure appendix

601

Disclaimer

603

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Corporate Bond Covenants
September 2010

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European Credit Research


Corporate Bond Covenants
September 2010

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Preface
This is the latest edition of our corporate bond covenants guide, first
published in 2004. The guide has grown to provide a summary of the
key terms and conditions for almost 1,200 euro- and sterlingdenominated bonds issued by around 250 companies across all nonfinancial sectors. The focus is on investment grade benchmark bonds
(over EUR500m/GBP100m) although we made an allowance for some
smaller, unrated or sub-investment grade issues which in our view
may be of particular interest to investors. A separate section of the
guide includes hybrid bonds.
The information provided herein should not be substituted for
investors' own due diligence, i.e. a full review of all terms and
conditions of bond prospectuses (including supplements), offering
circulars or other appropriate documentation should be undertaken
before making an investment decision.
September 2010

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Corporate Bond Covenants
September 2010

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Corporate Bond Covenants
September 2010

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Autos, Industrials &


Infrastructure

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Corporate Bond Covenants
September 2010

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Corporate Bond Covenants
September 2010

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Aerospace & Defence,


Auto Parts,
Capital Goods

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Corporate Bond Covenants
September 2010

Alstom
Bond
Coupon

Maturity

4%

Issuer

Guarantor

Out amt

Type

23 Sep 2014 Alstom SA

None

EUR750m

Senior unsecured

4.125%

01 Feb 2017 Alstom SA

None

EUR750m

Senior unsecured

4.5%

18 Mar 2020 Alstom SA

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Yes. Relevant debt covers bonds listed or traded on a regulated securities market.
Put
Put at 101% of the principal amount on a change of control (one or more individuals or institutions, acting alone or in
concert, who did not previously control the issuer, acquiring control of the issuer ie holding directly or indirectly through
companies controlled by the person(s) concerned more than 50% of the voting rights attached to the issuers shares)
Covenants
None
Other
Events of default include cross-default of the issuer or any of its principal subsidiaries (>5% or more of the
consolidated group revenues) on financial debt of at least EUR35m (excludes project finance indebtedness)
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Areva
Bond
Coupon

Maturity

3.875%

Issuer

Guarantor

Out amt

Type

23 Sep 2016 AREVA SA

None

EUR1250m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

4.375%

06 Nov 2019 AREVA SA

None

EUR750m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

4.875%

23 Sep 2024 AREVA SA

None

EUR1000m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, defined as any bonds, notes, debentures, loan stock
or other quoted/listed securities
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer or a material subsidiary (>5% of group assets or revenues) on
indebtedness in excess of EUR35m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Atlas Copco
Bond
Coupon

Maturity

Issuer

4.75%

05 Jun 2014 Atlas Copco

Guarantor

Out amt

Type

None

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Yes, but excludes bank debt/permitted security interests. Limitation on sale and leaseback transactions
Put
Yes, put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade,
or a full rating notch downgrade if the ratings are already non-investment grade
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of USD40m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

BAE Systems
Bond
Coupon

Maturity

Issuer

10.75%

24 Nov 2014 BAE Systems plc

Guarantor

Out amt

Type

None

GBP100m

Senior unsecured

Call
Callable at higher of par or UKT 12% 2013/2017 + standard UK tax call
Negative pledge
See covenants for limit on secured indebtedness
Put
None
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 150% of adj. share capital and
reserves, secured borrowings not to exceed 50% of adj. share capital and reserves other adjustments) + restrictions
on disposals of assets (gross value of assets disposed of not to exceed 30% of gross value of group assets)
Other
Events of default include cross-default of issuer/principal subsidiary (>15% of adj. share capital and reserves or
turnover or group PBT) on indebtedness in excess of 1% of adj. share capital and reserves
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

EADS
Bond
Coupon

Maturity

4.625%

5.5%

Issuer

Guarantor

Out amt

Type

12 Aug 2016 EADS Finance BV

EADS NV

EUR1000m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

25 Sep 2018 EADS Finance BV

EADS NV

EUR500m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

Call
Non-callable except for taxation reasons
Negative pledge
Yes, but excludes bank debt/project finance debt/securitisation debt/acquisition debt/existing securirty
Put
None
Covenants
None
Other
Events of default include cross-acceleration of issuer/guarantor/material subsidiaries (>60% of consolidated assets)
on indebtedness in excess of EUR100m (for 2018 bond) / EUR150m (for 2016 bond)
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Finmeccanica
Bond
Coupon

Maturity

8.125%

8%

Issuer

Guarantor

Out amt

Type

03 Dec 2013 Finmeccanica Finance Finmeccanica SpA


SA

EUR1000m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme

16 Dec 2019 Finmeccanica Finance Finmeccanica SpA


SA

GBP400m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme

Call
Non-callable except for taxation reasons
Negative pledge
Yes, excludes bank debt/securitisation, covers issuer, guarantor or material subsidiary. Relevant indebtedness
covers any bond, note, debenture, or similar instrument that is, or is capable of being, listed, quoted or traded on any
stock exchange or in any securities market and OTC market. Material subsidiary is defined as any company with
excess of 50% of issued share capital owned by Finmeccanica or 10% of consolidated gross revenues and assets.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or any material subsidiary on indebtedness in excess of
EUR25m. Material subsidiary is defined as any company with excess of 50% of issued share capital owned by
Finmeccanica or 10% of consolidated gross revenues and assets.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Finmeccanica
Bond
Coupon

Maturity

5.75%

Issuer

Guarantor

Out amt

Type

12 Dec 2018 Finmeccanica Finance Finmeccanica SpA


SA

EUR500m

Senior unsecured
issued under the
companys EUR1.1bn
EMTN programme

5.25%

21 Jan 2022 Finmeccanica Finance Finmeccanica SpA


SA

EUR600m

Senior unsecured
issued under the
companys EUR3.8bn
EMTN programme

4.875%

24 Mar 2025 Finmeccanica Spa

EUR500m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

None

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt/securitisation, covers issuer, guarantor or material subsidiary. Relevant indebtedness
covers any bond, note, debenture, or similar instrument that is, or is capable of being, listed, quoted or traded on any
stock exchange or in any securities market and OTC market. Material subsidiary is defined as any company with
excess of 50% of issued share capital owned by Finmeccanica or 10% of consolidated gross revenues and assets.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or any material subsidiary on indebtedness in excess of
EUR25m. Material subsidiary is defined as any company with excess of 50% of issued share capital owned by
Finmeccanica or 10% of consolidated gross revenues and assets.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

GKN
Bond
Coupon

Maturity

Issuer

7%

14 May 2012 GKN Holdings plc

Guarantor

Out amt

Type

None

GBP201m

Senior unsecured

Call
Non-callable except for tax reasons
Negative pledge
Yes, but excludes bank debt
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (> 10% of profits on ordinary activities before
tax and exceptionals or of net assets) on indebtedness in excess of the greater of GBP15m or 1% of adjusted capital
and reserves.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

GKN
Bond
Coupon

Maturity

Issuer

6.75%

28 Oct 2019 GKN Holdings plc

Guarantor

Out amt

Type

None

GBP350m

Senior unsecured

Call
Callable at higher of par or UKT 8% 2021 + standard UK tax call
Negative pledge
Yes, but excludes bank debt
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (> 10% of profits on ordinary activities before
tax and exceptionals or of net assets) on indebtedness in excess of the greater of GBP15m or 1% of adjusted capital
and reserves.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Metso
Bond
Coupon

Maturity

Issuer

10 Jun 2014 Metso Corporation


7.25%
Step up
(See Other)

Guarantor

Out amt

Type

None

EUR300m

Senior unsecured
issued under the
companys EUR1.5bn
EMTN programme.

Call
Non-callable except for taxation reasons
Negative pledge
Yes, excludes bank debt/securitisation. Relevant indebtedness covers any bond, note, debenture, or similar
instrument that is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market
and OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in a
rating downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR15m. Material
subsidiary is defined as a subsidiary of the issuer whose total assets or net sales are not less than 5% of the
consolidated total assets or net sales, respectively. Coupon steps up by 125bp if rating is downgraded to noninvestment grade by Moodys or S&P or if the bond ceases to be rated by at least two rating agencies, and steps
down if upgraded back to investment grade by both Moodys and S&P.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Michelin
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.5%

16 Apr 2012 Michelin Luxembourg Compagnie Financiere EUR500m


SCS
Michelin

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR10m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Michelin
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

24 Apr 2014 Michelin Luxembourg Compagnie Financiere EUR750m


8.625%
Step up
SCS
Michelin
(See Other)

Type
Senior unsecured
issued under the
companys EUR2bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt/securitisation. Relevant indebtedness covers any bond, note, debenture, or similar
instrument that is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market
and OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on capital indebtedness in excess of EUR50m. Coupon
steps up by 125bp if rating is downgraded to non-investment grade, steps down if upgraded back to investment grade.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Robert Bosch
Bond
Coupon

Maturity

3.75%

Issuer

Guarantor

Out amt

Type

12 Jun 2013 Robert Bosch GmbH None

EUR700m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

4.375%

19 May 2016 Robert Bosch GmbH None

EUR750m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

5.125%

12 Jun 2017 Robert Bosch GmbH None

EUR600m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

5%

06 Aug 2019 Robert Bosch GmbH None

EUR300m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but only covers capital market indebtedness. Capital market indebtedness is defined as obligation for the
repayment of money in the form of bonds, notes, or any other similar securities that are or intended to be quoted,
listed or traded on any stock exchange.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on capital market indebtedness in excess of EUR25m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Rolls Royce
Bond
Coupon

Maturity

Issuer

7.375%

14 Jun 2016 Rolls Royce plc

Guarantor

Out amt

Rolls Royce Group plc GBP200m

Type
Senior unsecured
issued under the
companys GBP600m
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt/sterling debenture stock.
Put
Yes, put at par if restructuring event (change of control/disposals within 36 months represent more than 50% of
group operating profit) leads to rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of GBP20m or, if greater, 2%
of consolidated net worth.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Rolls Royce
Bond
Coupon

Maturity

Issuer

4.5%

16 Mar 2011 Rolls Royce plc

Guarantor

Out amt

Rolls Royce Group plc EUR750m

Type
Senior unsecured
issued under the
companys
GBP1.25bn EMTN
programme

Call
Non-callable except for taxation reasons
Negative pledge
Yes, but excludes bank debt/sterling debenture stock
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of GBP20m or, if greater, 2%
of consolidated net worth.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Rolls Royce
Bond
Coupon

Maturity

Issuer

6.75%

30 Apr 2019 Rolls-Royce plc

Guarantor

Out amt

Rolls-Royce Group plc GBP500m

Type
Senior unsecured
issued under the
companys
EUR1.75bn EMTN
programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt/sterling debenture stock. Relevant indebtedness covers any bond, note, debenture, or
similar instrument that is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities
market and OTC market of the issuer or the guarantor.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights of the
guarantor or any company of which the guarantor is a subsidiary) resulting in a rating downgrade to non-investment
grade or a rating withdrawal or a one-notch downgrade if already non-IG by S&P or Moodys.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of GBP20m or, if greater, 2%
of consolidated net worth.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Safran
Bond
Coupon

Maturity

Issuer

4%

26 Nov 2014 Safran SA

Guarantor

Out amt

Type

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes. Relevant indebtedness covers bonds, notes or other securities (capable of being) quoted, listed or traded on
any stock exchange, or OTC or other securities market. It refers to the issuer and its principal subsidiaries (EBITDA
or assets >5% of group total).
Put
Put at par on change of control (with control as defined in the French Code du commerce)
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary on indebtedness exceeding EUR50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Sandvik
Bond
Coupon

Maturity

Issuer

6.875%

25 Feb 2014 Sandvik AB

Guarantor

Out amt

Type

None

EUR600m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

Call
Non-callable except for taxation reasons
Negative pledge
Yes, but excludes bank debt. relevant indebtedness covers any bond, note, debenture, or similar instrument that is,
or is capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or withdrawn or a one-notch downgrade if already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries on indebtedness in excess of EUR50m.
Principal subsidiary is defined as any subsidiary whose total assets represent 10% or more of the consolidated total
assets of the group.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Schneider Electric
Bond
Coupon

Maturity

Issuer

6.75%

16 Jul 2013

Guarantor

Out amt

Type

Schneider Electric SA None

EUR487m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme.

4.5%

17 Jan 2014 Schneider Electric SA None

EUR500m

Senior unsecured
issued under the
companys EUR4.7bn
EMTN programme

5.375%

08 Jan 2015 Schneider Electric SA None

EUR750m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme

3.625%

20 Jul 2020

EUR500m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme.

Schneider Electric SA None

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers relevant debt defined as bonds quoted, admitted to trading or ordinarily dealt in on any stock
exchange, OTC market or other securities market.
Put
Put at par on a change of control or a potential change of control (acquisition of more than 50% of the share capital
or more than 50% of the voting rights) resulting in a rating downgrade to non-investment grade (or a one-notch
downgrade if the ratings are already non-investment grade).
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries on indebtedness in excess of EUR40m.
Principal subsidiary is defined as any subsidiary of the issuer whose net operating income or total assets represent
10% or more of the consolidated net operating income or total assets of the issuer and its consolidated subsidiaries.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Schneider Electric
Bond
Coupon

Maturity

Issuer

Guarantor

4%

11 Aug 2017 Schneider Electric SA None

Out amt

Type

EUR1030m

Senior unsecured
issued under the
companys EUR3.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (representing more than 10% of consolidated
net operating income/consolidated assets) on indebtedness in excess of EUR40m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Siemens
Bond
Coupon

Maturity

Issuer

5.75%

04 Jul 2011

Guarantor

Out amt

Type

Siemens AG
Siemens
Financieringsmaatschappij NV

EUR2000m

Senior unsecured

5.25%

12 Dec 2011 Siemens


Siemens AG
Financieringsmaatschappij NV

EUR1550m

Senior unsecured
under the companys
EUR5bn programme

4.125%

20 Feb 2013 Siemens


Siemens AG
Financieringsmaatschappij NV

EUR2000m

Senior unsecured
under the companys
EUR10bn programme

5.375%

11 Jun 2014 Siemens


Siemens AG
Financieringsmaatschappij NV

EUR1000m

Senior unsecured
under the companys
EUR5bn programme

5.125%

20 Feb 2017 Siemens


Siemens AG
Financieringsmaatschappij NV

EUR2000m

Senior unsecured
under the companys
EUR10bn programme

5.625%

11 Jun 2018 Siemens


Siemens AG
Financieringsmaatschappij NV

EUR1600m

Senior unsecured
under the companys
EUR5bn programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default cover the default of the issuer and the guarantor.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Smiths Group
Bond
Coupon

Maturity

Issuer

7.25%

30 Jun 2016 Smith Group plc

Guarantor

Out amt

Type

None

GBP150m

Senior unsecured

Call
Callable at higher of par or UKT 8% 2015 + standard UK tax call.
Negative pledge
Yes, but excludes bank debt/sterling securities with maturities falling after 30 June 2020
Put
Yes, Put at par if restructuring event (change of control, assets disposed of representing more than 50% of
consolidated op. profit) results in a rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiaries (>15% of group turnover) on indebtedness in
excess of GBP20m or, if greater, 5% of adj. capital and reserves.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Thales
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.375%

22 Jul 2011

Thales SA

None

EUR775m

Senior unsecured
issued under the
companys EUR1.5bn
Global MTN
programme

4.375%

02 Apr 2013 Thales SA

None

EUR600m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt/project financing/securitisation.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR50m (for the 2011 bond) or
EUR100m (for the 2013 bond)
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Tomkins
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

8%

20 Dec 2011 Tomkins plc

None

GBP150m

Senior unsecured
issued under the
companys GBP750m
global MTN
programme

6.125%

16 Sep 2015 Tomkins Finance plc Tomkins plc

GBP250m

Senior unsecured
issued under the
companys GBP750m
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes but excludes bank debt.
Put
Yes, put at par in case of put event (defined as a change of control or disposal/acquisition of assets representing
more than 25% of group operating profits in the last 12 months) and subsequent downgrade to non-investment grade
(or withdrawal of ratings) if ratings investment grade or a 2-notch downgrade if ratings already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary (>15% of total assets and >5% of
turnover) on indebtedness in excess of GBP10m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Valeo
Bond
Coupon

Maturity

Issuer

3.75%

24 Jun 2013 Valeo

Guarantor

Out amt

Type

None

EUR600m

Senior unsecured
issued under the
companys EUR2bn
EMTN Programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and applies to material subsidiaries (>10% of consolidated assets, revenues and op.
income).
Put
Yes, put at par in case of change of control (>50% of capital or voting rights owned or acquired by any person or
persons acting in concert) and subsequent rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR20m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Vestas
Bond
Coupon

Maturity

Issuer

Guarantor

4.625%

23 Mar 2015 Vestas Wind Systems None


A/S

Out amt

Type

EUR600m

Senior unsecured

Call
Callable at par for taxation reasons. Also callable at the option of the issuer (with not less than 30 nor more than 60
days notice) at make whole + 35bp. Also 20% clean-up call at par if put option is exercised.
Negative pledge
Yes. Relevant debt covers any bond, note, loan stock, or other securities listed/traded on any stock exchange or
other securities (including OTC) market.
Put
Put at par on change of control (power to cast more than half of the votes at a shareholders general meeting, or power
to appoint/remove the majority of the directors of the board, or the holding more than half of the issued share capital)
Covenants
None
Other
Events of default include cross-default of issuer or any material subsidiary (whose gross assets or pre-tax profits are
at least 15% of the groups total) on financial indebtedness exceeding 3% of the issuers total equity.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

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Corporate Bond Covenants
September 2010

abc

Autos

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Corporate Bond Covenants
September 2010

BMW
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

29 Oct 2010 BMW Finance NV

BMW AG

EUR400m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

5.25%

04 Feb 2011 BMW Finance NV

BMW AG

EUR600m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

3.875%

06 Apr 2011 BMW Finance NV

BMW AG

EUR750m

Senior unsecured
issued under the
companys USD10bn
EMTN programme

4.125%

24 Jan 2012 BMW Finance NV

BMW AG

EUR1000m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme

6.125%

02 Apr 2012 BMW Finance

BMW AG

EUR1250m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

Call
Non-callable except for tax reasons.
Negative pledge
Negative pledge covers the International capital market indebtedness (notes with an original maturity of more than
one year).
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

BMW
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

6.375%

23 Jul 2012

BMW US Capital, LLC BMW AG

EUR1500m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

4.875%

18 Oct 2012 BMW Finance N.V.

EUR1000m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme

4.625%

20 Feb 2013 BMW US Capital, LLC BMW AG

EUR750m

Senior unsecured
issued under the
companys USD10bn
EMTN programme

2.875%

18 Apr 2013 BMW Finance NV

BMW AG

EUR1000m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

8.875%

19 Sep 2013 BMW Finance NV

BMW AG

EUR1250m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

BMW AG

Call
Non-callable except for tax reasons.
Negative pledge
Negative pledge covers the international capital market indebtedness (notes with an original maturity of more than
one year).
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

BMW
Bond
Coupon

Maturity

5.25%

Issuer

Guarantor

Out amt

Type

21 Nov 2013 BMW Finance NV

BMW AG

GBP300m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme

4.25%

22 Jan 2014 BMW Finance NV

BMW AG

EUR1400m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme

4%

17 Sep 2014 BMW Finance NV

BMW AG

EUR1800m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

5%

28 May 2015 BMW US Capital, LLC BMW AG

EUR1750m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

3.875%

18 Jan 2017 BMW Finance NV

EUR1500m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

BMW AG

Call
Non-callable except for tax reasons.
Negative pledge
Negative pledge covers the international capital market indebtedness (notes with an original maturity of more than
one year).
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

BMW
Bond
Coupon

Maturity

5%

5%

Issuer

Guarantor

Out amt

Type

02 Oct 2017 BMW (UK) Capital plc BMW AG

GBP300m

Senior unsecured
issued under the
companys EUR30bn
EMTN programme

06 Aug 2018 BMW Finance NV

EUR750m

Senior unsecured
issued under the
companys USD10bn
EMTN programme

BMW AG

Call
Non-callable except for tax reasons.
Negative pledge
Negative pledge covers the international capital market indebtedness (notes with an original maturity of more than
one year).
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Daimler
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

3.625%

10 Nov 2010 Daimler Canada


Finance Inc

Daimler AG

EUR1000m

Senior unsecured
issued under the
companys USD25bn
EMTN programme

7%

21 Mar 2011 Daimler International Daimler AG


Finance B.V.

EUR1000m

Senior unsecured
issued under the
companys USD20bn
EMTN programme

6.875%

10 Jun 2011 Daimler International Daimler AG


Finance B.V.

EUR1000m

Senior unsecured
issued under the
companys USD35bn
EMTN programme

5.75%

10 Aug 2011 Daimler Canada


Finance Inc

GBP300m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

5.875%

08 Sep 2011 Daimler International Daimler AG


Finance B.V.

EUR1500m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

Daimler AG

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer (or guarantor) on indebtedness in excess of USD25m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Daimler
Bond
Coupon

Maturity

4.25%

Issuer

Guarantor

Out amt

Type

04 Oct 2011 Daimler Finance North Daimler AG


America LLC

EUR1250m

Senior unsecured
issued under the
companys USD25bn
EMTN programme

9%

30 Jan 2012 Daimler International Daimler AG


Finance B.V.

EUR1000m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

7.75%

26 Mar 2012 Daimler International Daimler AG


Finance B.V.

EUR700m

Senior unsecured
issued under the
companys USD35bn
EMTN programme

5%

23 May 2012 Daimler Finance North Daimler AG


America LLC

EUR750m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

4.375%

21 Mar 2013 Daimler Finance North Daimler AG


America LLC

EUR1250m

Senior unsecured
issued under the
companys USD25bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer (or guarantor) on indebtedness in excess of USD25m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Daimler
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

3%

19 Jul 2013

Daimler AG

None

EUR1000m

Senior unsecured
issued under the
companys EUR35bn
EMTN programme

7.875%

16 Jan 2014 Daimler International Daimler AG


Finance B.V.

EUR2000m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

4.625%

02 Sep 2014 Daimler AG

EUR2000m

Senior unsecured
issued under the
companys EUR35bn
EMTN programme

6.125%

08 Sep 2015 Daimler International Daimler AG


Finance B.V.

EUR750m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

4.125%

19 Jan 2017 Daimler AG

EUR1000m

Senior unsecured
issued under the
companys EUR35bn
EMTN programme

None

None

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer (or guarantor) on indebtedness in excess of USD25m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fiat
Bond
Coupon

Maturity

Issuer

Guarantor

6.75%

25 May 2011 Fiat Finance & Trade Fiat SpA

Out amt

Type

EUR1300m

Senior unsecured
under the companys
EUR15bn EMTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the quoted indebtedness of the issuer or the guarantor defined as bonds, notes, debentures,
loan stock or other securities which are capable of being quoted, listed or ordinarily dealt in on any stock exchange
or OTC market or other securities market.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fiat
Bond
Coupon

Maturity

Issuer

Guarantor

5.625%

15 Nov 2011 Fiat Finance & Trade Fiat SpA

Out amt

Type

EUR1000m

Senior unsecured
under the companys
EUR15bn EMTN
programme

Call
Callable on giving not less than 15 or more than 30 days notice to the noteholders. The redemption amount is the
greater of 101% of par and Bunds + 50bp. Also callable except for taxation reasons.
Negative pledge
Negative pledge covers the quoted indebtedness of the issuer or the guarantor defined as bonds, notes, debentures,
loan stock or other securities which are capable of being quoted, listed or ordinarily dealt in on any stock exchange
or OTC market or other securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary on indebtedness in excess of
EUR100m, cross-acceleration on indebtedness over EUR250m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fiat
Bond
Coupon

Maturity

Issuer

Guarantor

6.625%

15 Feb 2013 Fiat Finance & Trade Fiat SpA

Out amt

Type

EUR1000m

Senior unsecured

Call
Callable the redemption amount is the greater of 101% of par and Bunds + 50bp. Also callable for taxation
reasons.
Negative pledge
Negative pledge covers the indebtedness of the issuer/guarantor/material subsidiary defined as any notes, bonds
debenture stock, loan stock or other securities, any loan financing/loan stock, any liability under or in respect of any
bankers acceptance or bankers acceptance credit. Excludes indebtedness of a member of the Fiat Group to any
other member of the Fiat Group and securitisation indebtedness.
Put
Put at 101 + accrued interest on change of control (>50% of voting rights) resulting in a rating downgrade (one-notch
downgrade if the ratings are non-investment grade, two-notch downgrade if ratings are investment grade).
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary on indebtedness in excess of
EUR100m, cross-acceleration on indebtedness over EUR250m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fiat
Bond
Coupon

Maturity

Issuer

5.625%

12 Jun 2017 Fiat Finance North


America Inc

Guarantor

Out amt

Type

Fiat SpA

EUR1000m

Senior unsecured
issued under the
companys EUR15bn
global MTN
programme

Call
Callable on giving not less than 15 or more than 30 days notice to the noteholders. The redemption amount is the
greater of 101% of par and Bunds + 50bp. Also callable for taxation reasons
Negative pledge
Yes, excludes bank debt.
Put
Put at 101 + accrued interest on change of control and rating downgrade (one-notch downgrade if the ratings are
non-investment grade, two-notch downgrade if ratings are investment grade).
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary on indebtedness in excess of
EUR100m, cross-acceleration on indebtedness over EUR200m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fiat
Bond
Coupon

Maturity

Issuer

9%

30 Jul 2012

Guarantor

Out amt

Type

Fiat Finance & Trade Fiat SpA

EUR1250m

Senior unsecured
issued under the
companys EUR15bn
global MTN
programme

7.625%

15 Sep 2014 Fiat Finance & Trade Fiat SpA

EUR1250m

Senior unsecured
issued under the
companys EUR15bn
global MTN
programme

6.875%

13 Feb 2015 Fiat Finance & Trade Fiat SpA

EUR1500m

Senior unsecured
issued under the
companys EUR15bn
global MTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary on indebtedness in excess of
EUR100m, cross-acceleration on indebtedness over EUR200m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

MAN
Bond
Coupon

Maturity

5.375%

7.25%

Issuer

Guarantor

Out amt

Type

20 May 2013 MAN SE

None

EUR1000m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme.

20 May 2016 MAN SE

None

EUR500m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and covers capital market indebtedness. Capital market indebtedness is defined as
obligation for the repayment of money in the form of bonds, notes, or any other similar securities that are or intended
to be quoted, listed or traded on any stock exchange or OTC market.
Put
Put at par on put event defined as a change of control (acquired or control of shares carrying >50% voting rights of
issuer) resulting in a rating downgrade to non-investment grade or a full rating notch downgrade if the ratings are
already non-investment grade by Moodys or S&P.
Covenants
None
Other
Events of default include cross-default of issuer on capital indebtedness in excess of EUR50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

PSA
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

16 Nov 2010 Banque PSA Finance None


6.375%
Step up
(See Other)

EUR750m

Senior unsecured
under the companys
EUR14bn EMTN
programme

3.75%

11 Mar 2011 Banque PSA Finance None

EUR500m

As above

3.625%

14 Oct 2011 Banque PSA Finance None

EUR750m

As above

8.5%
04 May 2012 Banque PSA Finance None
Step up
(See Other)

EUR750m

As above

3.875%

18 Jan 2013 Banque PSA Finance None

EUR750m

As above

4%

19 Jul 2013

Banque PSA Finance None

EUR500m

As above

3.625%

17 Sep 2013 Banque PSA Finance None

EUR750m

As above

3.5%

17 Jan 2014 Banque PSA Finance None

EUR600m

As above

3.625%

29 Apr 2014 Banque PSA Finance None

EUR500m

As above

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers any indebtedness in the form of, or represented by, bonds, notes, debentures or other
securities which are, are to be, or are capable of being, quoted, listed or ordinarily traded on any stock exchange or
on any OTC securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary (representing more than 10% of net consolidated
banking revenues or assets of BPF) on indebtedness in excess of EUR30m. For the 2010 and 2012 bonds, the coupon
steps up by 125bp if one or more rating agencies downgrade the ratings below investment grade, steps down by 125bp if
one or more rating agencies upgrade the ratings to investment grade such that all ratings are investment grade.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

PSA
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

8.375%

15 Jul 2014

Peugeot SA

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers any indebtedness in the form of, or represented by, bonds, notes, debentures or other
securities which are, are to be, or are capable of being, quoted, listed or ordinarily traded on any stock exchange or
on any OTC securities market.
Put
Put at par in case of change of control (acquisition of >50% of the voting rights) resulting in a rating downgrade to noninvestment grade (or one-notch downgrade or more if the ratings are already non-investment grade) within the change of
control period (180 days after the occurrence of the change of control). Does not apply in case of permitted restructuring
(CoC obtained by the principal shareholders: Etablissements Peugeot Freres, La Francaise de Participations
Financieres, Fonciere Financiere et de Participations and Comtoise de Participation and their respective successors).
Covenants
None
Other
Events of default include cross-default of the issuer/principal subsidiary on indebtedness for borrowed money in
excess of EUR15m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

PSA
Bond
Coupon

Maturity

Issuer

5.625%

29 Jun 2015 Peugeot SA

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme.

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers any relevant indebtedness defined as any indebtedness in the form of bonds, notes,
debentures or other securities which are quoted, listed or ordinarily traded on any stock exchange or OTC market.
Excludes permitted security (existing security on after-acquired subsidiaries, any permitted secured indebtedness).
Put
Put at par in the event of change of control (acquisition of >50% of the voting rights) resulting in a rating downgrade to noninvestment grade (or one-notch downgrade or more if the ratings are already non-investment grade) within the change of
control period (180 days after the occurrence of the change of control). Does not apply in case of permitted restructuring
(CoC obtained by the principal shareholders: Etablissements Peugeot Freres, La Francaise de Participations Financieres,
Fonciere Financiere et de Participations and Comtoise de Participation and their respective successors).
Covenants
None
Other
Events of default include cross-default of the issuer or any principal subsidiary (>10% of consolidated assets or
consolidated sales and revenue) on indebtedness for borrowed money in excess of EUR30m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

PSA
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.875%

27 Sep 2011 GIE PSA Tresorerie

Peugeot SA

EUR1255m

Senior unsecured

6%

19 Sep 2033 GIE PSA Tresorerie

Peugeot SA

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers any indebtedness in the form of, or represented by, bonds, notes, debentures or other
securities which are, are to be, or are capable of being, quoted, listed or ordinarily traded on any stock exchange or
on any OTC securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (representing more than 10% of
consolidated revenues or assets) on indebtedness in excess of EUR15m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Renault
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

30 Nov 2010 RCI Banque


5.875%
Step up
(See Other)

None

EUR750m

Senior unsecured
under the companys
EUR12bn EMTN
programme

5.25%

27 May 2011 RCI Banque

None

EUR700m

As above

3.125%

08 Jul 2011

RCI Banque

None

EUR500m

As above

4%

21 Oct 2011 RCI Banque

None

EUR750m

As above

8.125%
15 May 2012 RCI Banque
Step up
(See Other)

None

EUR750m

As above

2.875%

23 Jul 2012

RCI Banque

None

EUR600m

As above

2.75%

10 Sep 2012 RCI Banque

None

EUR500m

As above

3.375%

23 Jan 2013 RCI Banque

None

EUR500m

As above

4%

11 Jul 2013

RCI Banque

None

EUR675m

As above

4.375%

27 Jan 2015 RCI Banque

None

EUR600m

As above

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer on relevant indebtedness in excess of EUR15m. For 2010 and
May 2012 bonds, the coupon steps up by 125bp if one or more rating agencies downgrade the ratings below
investment grade, steps down by 125bps if one or more rating agencies upgrade the ratings to investment grade
such that all ratings are investment grade. The rate of interest shall never be lower than the base interest rate per
annum nor higher than 7.125% (for 2010 bonds) / 9.375% (for May 2012 bonds).
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Renault
Bond
Coupon

Maturity

4.5%

Issuer

Guarantor

Out amt

Type

16 Apr 2012 Renault SA

None

EUR500m

Senior unsecured
issued under the
companys EUR7bn
EMTN programme

4.375%

24 May 2013 Renault SA

None

EUR800m

As above

6%

13 Oct 2014 Renault SA

None

EUR750m

As above

5.625%

30 Jun 2015 Renault SA

None

EUR650m

As above

5.625%

22 Mar 2017 Renault SA

None

EUR500m

As above

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Scania
Bond
Coupon

Maturity

Issuer

3.625%

22 Feb 2011 Scania CV AB

Guarantor

Out amt

Type

Scania AB

EUR600m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in case of change of control and subsequent downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiaries (representing more than 10% of total
assets) on indebtedness in excess of USD20m.
Source: Company data, HSBC

55

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Corporate Bond Covenants
September 2010

Toyota
Bond
Coupon

Maturity

Issuer

5.25%

10 Dec 2010 Toyota Motor Credit

Guarantor

Out amt

Type

None

GBP200m

Senior unsecured
issued under the
companys EUR40bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of USD50m.
Source: Company data, HSBC

56

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Corporate Bond Covenants
September 2010

Toyota
Bond
Coupon

Maturity

Issuer

4.625%

01 Feb 2011 Toyota Motor Credit


Corporation

Guarantor

Out amt

Type

None

GBP405m

Senior unsecured
issued under the
companys USD20bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of USD3m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Toyota
Bond
Coupon

Maturity

Issuer

Guarantor

5.125%

17 Jan 2012 Toyota Credit Canada None


Inc

Out amt

Type

GBP250m

Senior unsecured
issued under the
companys EUR12bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on borrowed money in excess of USD10m.
Source: Company data, HSBC

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European Credit Research


Corporate Bond Covenants
September 2010

Toyota
Bond
Coupon

Maturity

Issuer

4.25%

02 May 2012 Toyota Motor Credit


Corporation

Guarantor

Out amt

Type

None

EUR850m

Senior unsecured
issued under the
companys USD30bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of USD50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Toyota
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.375%

29 Jul 2011

Toyota Motor Credit

None

EUR1000m

Senior unsecured
issued under the
companys EUR40bn
EMTN programme.

5.25%

03 Feb 2012 Toyota Motor Credit

None

EUR2500m

Senior unsecured
issued under the
companys EUR40bn
EMTN programme.

4.625%

18 Sep 2013 Toyota Motor Credit

None

EUR500m

Senior unsecured
issued under the
companys EUR40bn
EMTN programme.

6.625%

03 Feb 2016 Toyota Motor Credit

None

EUR1250m

Senior unsecured
issued under the
companys EUR40bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of USD10m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Volkswagen
Bond
Coupon

Maturity

5%

5.125%

Issuer

Guarantor

Out amt

Type

03 Feb 2011 Volkswagen Credit


Canada, Inc.

Volkswagen AG

EUR300m

Senior unsecured
issued under the
groups EUR20bn debt
issuance programme

19 May 2011 Volkswagen Credit,


Inc.

Volkswagen AG

EUR1250m

Senior unsecured
issued under the
groups EUR20bn debt
issuance programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but does not apply to security provided in connection with the asset-backed securities of the issuer, or by a
special-purpose vehicle where the issuer is the originator of the underlying assets.
Put
None
Covenants
None
Other
No cross-default provisions. The guarantee binds the guarantor (Volkswagen AG) not to provide for any public bond
issue any security upon its assets without at the same time having the bondholders share equally and rateably in
such security. This does not apply to security provided in connection with ABS or SPVs.
Source: Company data, HSBC

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European Credit Research


Corporate Bond Covenants
September 2010

Volkswagen
Bond
Coupon

Maturity

3.75%

Issuer

Out amt

Type

16 Nov 2010 Volkswagen


Volkswagen AG
International Finance
N.V.

EUR1750m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme.

5.25%

01 Apr 2011 Volkswagen


Volkswagen AG
International Finance
N.V.

EUR1500m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme.

4.125%

31 May 2011 Volkswagen Leasing VW Fin Services AG


GmbH

EUR1000m

Senior unsecured
issued under the
companys EUR18bn
EMTN programme

4.75%

19 Jul 2011

VW Fin Services AG None

EUR1000m

Senior unsecured
issued under the
companys EUR18bn
EMTN programme

5.375%

25 Jan 2012 VW Fin Services AG None

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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European Credit Research


Corporate Bond Covenants
September 2010

Volkswagen
Bond
Coupon

Maturity

5.625%

Issuer

Guarantor

Out amt

Type

09 Feb 2012 Volkswagen


Volkswagen AG
International Finance
N.V.

EUR2500m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme.

3.875%

09 Jul 2012

EUR425m

Senior unsecured
issued under the
issuers EUR18bn
debt issuance
programme

4.875%

18 Oct 2012 Volkswagen Leasing VW Financial Services EUR1250m


GmbH
AG

Senior unsecured
issued under the
companys EUR18bn
EMTN programme.

4.875%

22 May 2013 VW International Fin Volkswagen AG


NV

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

2.375%

28 Jun 2013 VW Bank GmbH

EUR1000m

As above

5.375%

15 Nov 2013 Volkswagen


Volkswagen AG
International Finance
N.V.

EUR1250m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme.

Volkswagen Financial None


Services AG

None

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Volkswagen
Bond
Coupon

Maturity

6.875%

Issuer

Out amt

Type

15 Jan 2014 Volkswagen Financial None


Services AG

EUR1500m

Senior unsecured
issued under the
issuers EUR18bn
debt issuance
programme

3.375%

28 Jul 2014

EUR1000m

Senior unsecured
issued under the
issuers EUR18bn
debt issuance
programme

3.5%

02 Feb 2015 Volkswagen


Volkswagen AG
International Finance
NV

EUR1250m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme

7%

09 Feb 2016 Volkswagen


Volkswagen AG
International Finance
N.V.

EUR1000m

Senior unsecured
issued under the
companys EUR20bn
EMTN programme.

5.375%

22 May 2018 VW International Fin Volkswagen AG


NV

EUR500m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Volkswagen Financial None


Services AG

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

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European Credit Research


Corporate Bond Covenants
September 2010

Volvo
Bond
Coupon

Maturity

7.875%

Issuer

Guarantor

Out amt

Type

01 Oct 2012 Volvo Treasury AB

Volvo AB

EUR500m

Senior unsecured
issued under the
companys USD15bn
EMTN programme.

9.875%

27 Feb 2014 Volvo Treasury AB

Volvo AB

EUR700m

Senior unsecured
issued under the
companys USD15bn
EMTN programme.

5%

31 May 2017 Volvo Treasury AB

Volvo AB

EUR1000m

Senior unsecured
issued under the
companys USD10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. External indebtedness covers any bond, note, debenture, or similar instrument that is, or
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting
in a rating downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if already noninvestment grade.
Covenants
None
Other
Events of default include cross-default of issuer/parent/principal subsidiary on indebtedness in excess of USD60m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

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Corporate Bond Covenants
September 2010

abc

Building Materials &


Construction

67

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Corporate Bond Covenants
September 2010

Cemex Espaa
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.75%

05 Mar 2014 Cemex Finance Europe BV Cemex Espaa SA EUR900m

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt/permitted securitisation.
Put
Put at par on put event defined as a change of control of the guarantor (Cemex Espaa) or the parent (Cemex SAB
de CV) resulting in a rating downgrade from investment grade to non-investment grade or in a one-notch downgrade
if the ratings are already junk.
Covenants
None
Other
Events of default include cross-default of issuer or guarantor or any principal subsidiaries on any indebtedness for
borrowed money in excess of EUR45m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Ciments Franais
Bond
Coupon

Maturity

Issuer

Guarantor

4.75%

04 Apr 2017 Ciments Franais SA None

Out amt

Type

EUR500m

Senior unsecured
issued under the
companys EUR1bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade or a
full rating notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer or principal subsidiaries on indebtedness in excess of EUR15m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Cimpor
Bond
Coupon

Maturity

Issuer

4.5%

27 May 2011 CIMPOR Financial


Operations BV

Guarantor

Out amt

Type

Corporacion Noroeste
SA, keep well
agreement from
CIMPOR SGPS SA

EUR600m

Senior unsecured
issued under
EUR1.5bn EMTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantors/relevant subsidiaries (>10% of consolidated turnover) on
indebtedness in excess of EUR25m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

CRH
Bond
Coupon

Maturity

Issuer

28 May 2014 CRH Finance B.V.


7.375%
Step up
(See Other)

Guarantor

Out amt

Type

CRH plc

EUR750m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt/securitisation and covers the Issuer, guarantor and principal subsidiaries of relevant
indebtedness. Relevant indebtedness is defined as bonds, notes, debentures, loan stock or other securities that are
for the time being, quoted, listed or ordinarily dealt in on any stock exchange, OTC or other securities market and
which have an original maturity of more than one year. Principal subsidiaries are subsidiaries of the guarantor which
exceed 10% of the consolidated net assets.
Put
Put at par on a put event defined as a change of control (whereby one acquires in excess of 50% of share capital or
voting rights) resulting in a rating downgrade to non-investment grade or one-notch downgrade if the ratings are
already junk.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or principal subsidiary on indebtedness in excess of
EUR50m or 1% of consolidated tangible net worth. Consolidated tangible net worth is defined as the amount paid up
or credited as paid up on the issued share capital of the guarantor and the amount standing to the credit of the
consolidated capital and revenue reserves of the Guarantor. Coupon steps up by 125bp if rating is downgraded to
non-investment grade by Moodys or S&P, steps down if upgraded back to investment grade by both agencies.
Source: Company data, HSBC

71

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Corporate Bond Covenants
September 2010

CRH
Bond
Coupon

Maturity

Issuer

8.25%

24 Apr 2015 CRH Finance (U.K.)


plc

Guarantor

Out amt

Type

CRH plc

GBP250m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness is defined as bonds, notes, debentures, loan stock or other
securities that are, for the time being, quoted, listed or ordinarily dealt in on any stock exchange, OTC or other
securities market and which have an original maturity of more than one year.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or principal subsidiary on indebtedness in excess of EUR50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Holcim
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

26 Mar 2014 Holcim Finance


9%
(Luxembourg) S.A.
Step up
(See Other)

Holcim Ltd

EUR650m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme.

8.75%
24 Apr 2017 Holcim GB Finance
Step up
Ltd.
(See Other)

Holcim Ltd

GBP300m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness is defined as any present or future indebtedness of the issuer or
guarantor in the form of notes, bonds, debentures or similar securities that are or intended to be traded on any stock
exchange, OTC or other securities market.
Put
Put at par on put event defined as a change of control (acquired or control of >50% voting rights or shares of
guarantor) during Change of control period (ending 90 days after announcement date) resulting in a rating
downgrade to non-investment grade or a full rating notch downgrade if the ratings are already non-investment grade
or withdrawn by Moodys, S&P or Fitch.
Covenants
None
Other
Events of default include cross-default of issuer or the guarantor on indebtedness in excess of 0.6% of guarantors
consolidated total shareholders equity and CHF125m. Coupon steps up by 125bp if rating is downgraded to noninvestment grade by Moodys, S&P or Fitch or is withdrawn by at least two rating agencies, steps down if upgraded
back to investment grade by at least two rating agencies.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Holcim
Bond
Coupon

Maturity

Issuer

4.375%

09 Dec 2014 Holcim Finance


(Luxembourg) S.A.

Guarantor

Out amt

Type

Holcim Ltd

EUR600m

Senior unsecured
issued under EUR2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of CHF50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Imerys
Bond
Coupon

Maturity

Issuer

18 Apr 2017 Imerys SA


5%
Step up
(See Other)

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Callable at the greater of par and B+20bp in the event of a rate of interest increase event (itself triggered by a
change of control resulting in a downgrade to non-investment grade).
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
In the event of a change of control and rating downgrade to Ba1 by Moodys, coupon steps up by 125bp; coupon
steps up another 25bp per notch downgrade until B3. Events of default include cross-default of issuer on any
indebtedness in excess of EUR50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Imerys
Bond
Coupon

Maturity

Issuer

5.125%

25 Apr 2014 Imerys SA

Guarantor

Out amt

Type

None

EUR300m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR20m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Italcementi
Bond
Coupon

Maturity

Issuer

19 Mar 2020 Italcementi Finance


5.375%
Step up
S.A.
(See Other)

Guarantor

Out amt

Type

Italcementi S.p.A

EUR750m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on a change of control (defined as control of Italcementi S.p.A. being acquired by any one person or group
of persons acting in concert, other than Italmobiliare S.p.A. or Efiparind B.V.) resulting in a rating downgrade to noninvestment grade or a rating withdrawal or a one-notch downgrade if already non-investment grade.
Covenants
None
Other
Events of default include cross-default of the issuer, guarantor or its principal subsidiaries on debt exceeding EUR30m.
Coupon steps up by 125bp in the event that S&P or Moodys downgrades the rating to non-investment grade; it steps
down by 125bp in the event of an upgrade resulting in S&P and Moodys having both investment grade ratings on
Italcementi.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Lafarge
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

27 May 2014 Lafarge SA


7.625%
Step up
(See Other)

None

EUR1000m

Senior unsecured
issued under the
companys EUR9bn
EMTN programme.

7.625%
24 Nov 2016 Lafarge SA
Step up
(See Other)

None

EUR750m

As above

8.75%
30 May 2017 Lafarge SA
Step up
(See Other)

None

GBP350m

As above

5%
13 Apr 2018 Lafarge SA
Step up
(See Other)

None

EUR500m

As above

5.5%
16 Dec 2019 Lafarge SA
Step up
(See Other)

None

EUR750m

As above

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness is defined as any present or future indebtedness of the issuer and
its principal subsidiaries in the form of notes, bonds, debentures or similar securities that are or intended to be traded
on any stock exchange, OTC or other securities market (unless the principal amount is below EUR300m).
Put
Put at par on a put restructuring event (acquiring more than 50% of share capital or voting rights) resulting in a rating
downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer or principal subsidiaries on indebtedness over EUR100m. Principal
subsidiaries are seen as any subsidiary of the issuer whose consolidated current operating income is at or exceeds
5% of the groups total. Coupon steps up by 125bp if rating is downgraded to non-investment grade by Moodys or
S&P, steps down if upgraded back to investment grade by both agencies.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Lafarge
Bond
Coupon

Maturity

5.75%

6.125%

Issuer

Guarantor

Out amt

Type

27 May 2011 Lafarge SA

None

EUR750m

Senior unsecured
issued under the
companys EUR9bn
EMTN Programme.

28 May 2015 Lafarge SA

None

EUR750m

Senior unsecured
issued under the
companys EUR9bn
EMTN Programme.

Call
Non-callable except for taxation reasons
Negative pledge
Yes, excludes bank debt. Relevant indebtedness is defined as any present or future indebtedness of the Issuer and
its principal subsidiaries in the form of notes, bonds, debentures or similar securities that are or intended to be traded
on any stock exchange, OTC or other securities market (unless the principal amount of which does not exceed
EUR300m).
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal, or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer or principal subsidiaries on indebtedness in excess of EUR100m.
Principal subsidiaries are seen as any subsidiary of the issuer whose consolidated current operating income is at or
exceeds 5% of the total consolidated current operating income of the issuer.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Lafarge
Bond
Coupon

Maturity

6.875%

6.625%

Issuer

Guarantor

Out amt

Type

06 Nov 2012 Lafarge SA

None

GBP350m

Senior unsecured
issued under EUR7bn
EMTN programme

29 Nov 2017 Lafarge SA

None

GBP200m

Senior unsecured
issued under EUR7bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (representing more than 10% of total assets or
operating income) on indebtedness in excess of EUR10m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Lafarge
Bond
Coupon

Maturity

5.448%

Issuer

Guarantor

Out amt

Type

04 Dec 2013 Lafarge SA

None

EUR500m

Senior unsecured

5%

16 Jul 2014

Lafarge SA

None

EUR612m

Senior unsecured
issued under EUR7bn
EMTN programme

4.25%

23 Mar 2016 Lafarge SA

None

EUR500m

Senior unsecured
issued under EUR7bn
EMTN programme

5.375%

26 Jun 2017 Lafarge SA

None

EUR500m

Senior unsecured
issued under the
companys EUR7bn
EMTN programme

4.75%

23 Mar 2020 Lafarge SA

None

EUR500m

Senior unsecured
issued under EUR7bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (representing more than 5% of total revenues)
on indebtedness in excess of EUR50m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Saint-Gobain
Bond
Coupon

Maturity

4.25%
4.875%

Issuer

Guarantor

Out amt

Type

31 May 2011 Compagnie de Saint- None


Gobain SA

EUR1100m

Senior unsecured

31 May 2016 Compagnie de Saint- None


Gobain SA

EUR700m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade or a
full rating notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR30m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Saint-Gobain
Bond
Coupon

Maturity

5.625%

Issuer

Guarantor

Out amt

Type

15 Dec 2016 Compagnie de Saint- None


Gobain SA

GBP300m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

4.75%

11 Apr 2017 Compagnie de Saint- None


Gobain SA

EUR1250m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

5.625%

15 Nov 2024 Compagnie de Saint- None


Gobain SA

GBP300m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade or a
full rating notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR50m.
Source: Company data, HSBC

83

abc

European Credit Research


Corporate Bond Covenants
September 2010

Saint-Gobain
Bond
Coupon

Maturity

6%

Issuer

Guarantor

Out amt

Type

20 May 2013 Compagnie de Saint- None


Gobain SA

EUR750m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

7.25%

16 Sep 2013 Compagnie de Saint- None


Gobain SA

EUR750m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

8.25%

28 Jul 2014

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Compagnie de Saint- None


Gobain SA

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or principal subsidiary on indebtedness in excess of EUR50m.
Principal subsidiaries are seen as those whose accounts are consolidated with those of the issuer and whose value
of net equity exceeds 5%.
Source: Company data, HSBC

84

abc

European Credit Research


Corporate Bond Covenants
September 2010

Saint-Gobain
Bond
Coupon

Maturity

Issuer

5%

25 Apr 2014 Saint Gobain


Nederland BV

Guarantor

Out amt

Type

Compagnie de SaintGobain SA

EUR501m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR15m.
Source: Company data, HSBC

85

European Credit Research


Corporate Bond Covenants
September 2010

86

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Chemicals and Pharma

87

abc

European Credit Research


Corporate Bond Covenants
September 2010

Air Liquide
Bond
Coupon

Maturity

6.125%

Issuer

Guarantor

Out amt

Type

28 Nov 2012 Air Liquide Finance

LAir Liquide SA

EUR469m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme

5%

22 Mar 2013 Air Liquide Finance

LAir Liquide SA

EUR400m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

4.375%

03 Jun 2015 LAir Liquide SA

None

EUR400m

Senior unsecured

5.25%

18 Jul 2017

LAir Liquide SA

EUR500m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

Air Liquide Finance

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but only applies to relevant indebtedness. Relevant indebtedness covers bonds or notes which are for the time
being, or are capable of being, quoted, listed or ordinarily dealt in on any stock exchange or any other regulated
securities market.
Put
Put at par on put event defined as a change of control (>50% issued share capital or voting rights of LAir Liquide)
resulting in a rating downgrade to non-investment grade or a full rating notch downgrade if the ratings are already
non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR50m.
Source: Company data, HSBC

88

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European Credit Research


Corporate Bond Covenants
September 2010

Air Liquide
Bond
Coupon

Maturity

5.25%

Issuer

Guarantor

Out amt

Type

28 Dec 2011 Air Liquide Finance

LAir Liquide SA

EUR300m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

4.125%

23 Jun 2013 Air Liquide Finance

LAir Liquide SA

EUR300m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

4.75%

25 Jun 2014 LAir Liquide SA

None

EUR700m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, only applies to bonds/notes.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR50m.
Source: Company data, HSBC

89

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European Credit Research


Corporate Bond Covenants
September 2010

Air Products
Bond
Coupon

Maturity

4.25%

Issuer

Guarantor

Out amt

Type

10 Apr 2012 Air Products and


Chemicals Inc

None

EUR300m

Senior unsecured

3.75%

08 Nov 2013 Air Products and


Chemicals Inc

None

EUR300m

Senior unsecured

3.875%

10 Mar 2015 Air Products and


Chemicals Inc

None

EUR300m

Senior unsecured

4.625%

15 Mar 2017 Air Products and


Chemicals Inc

None

EUR300m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers indebtedness of any restricted subsidiary, including bank debt. A restricted subsidiary is a
subsidiary which owns or leases a principal property. In addition, there is a restriction on sale-and-leaseback transactions.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on public indebtedness representing an amount in excess
of 2% of shareholders equity (for 2012, 2013, 2015 bonds) or USD125m (for 2017 bonds).
Source: Company data, HSBC

90

abc

European Credit Research


Corporate Bond Covenants
September 2010

Akzo Nobel
Bond
Coupon

Maturity

Issuer

4.25%

14 Jun 2011 Akzo Nobel NV

Guarantor

Out amt

Type

None

EUR538.5m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, only applies to public debt. Public debt refers to any loan, debt or other obligation of the issuer in the form of or
represented by bonds, notes, debentures, or any other publicly issued debt securities which are, or are capable of
being traded or listed on any stock exchange, OTC or other securities market and which, by their terms, have an
initial stated maturity of more than 12 months.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/major subsidiary (accounting for more than 10% of total sales) on
indebtedness in excess of USD25m.
Source: Company data, HSBC

91

abc

European Credit Research


Corporate Bond Covenants
September 2010

Akzo Nobel
Bond
Coupon

Maturity

7.75%

Issuer

Guarantor

Out amt

Type

31 Jan 2014 Akzo Nobel Sweden


Finance AB

Akzo Nobel NV

EUR1000m

Senior unsecured

7.25%

27 Mar 2015 Akzo Nobel NV

Akzo Nobel Sweden


Finance AB

EUR975m

Senior unsecured

8%

06 Apr 2016 Akzo Nobel NV

Akzo Nobel Sweden


Finance AB

GBP250m

Senior unsecured

Call
Tax call/clean-up call (see put provision)
Negative pledge
Yes, only applies to public debt. Public debt refers to any loan, debt or other obligation of the issuer or the guarantor
in the form of or represented by bonds, notes, debentures, or any other publicly issued debt securities which are, or
are capable of being traded or listed on any stock exchange, OTC or other securities market and which, by their
terms, have an initial stated maturity of more than 12 months.
Put
Put at par if within the stated period a change of control ( >50% of issued shares or voting rights of the guarantor)
occurs and a rating downgrade (defined as either a rating withdrawal or a rating downgrade to non-investment grade)
in respect to this change of control occurs, or if there are no rated securities a negative rating event occurs. The
issuer has a clean-up call if more than 80% of the bonds have been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross-default of issuer/major subsidiary (accounting for more than 10% of total sales) on
indebtedness in excess of EUR40m.
Source: Company data, HSBC

92

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European Credit Research


Corporate Bond Covenants
September 2010

AstraZeneca
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

12 Nov 2010 AstraZeneca plc

None

EUR750m

Senior unsecured

5.75%

13 Nov 2031 AstraZeneca plc

None

GBP350m

Senior unsecured

5.125%

15 Jan 2015 AstraZeneca plc

None

EUR750m

Senior unsecured
issued under the
companys USD5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade or a
full rating notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
None
Source: Company data, HSBC

93

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European Credit Research


Corporate Bond Covenants
September 2010

BASF
Bond
Coupon

Maturity

4%

Issuer

Guarantor

Out amt

Type

21 Apr 2011 BASF SE

None

EUR1000m

Senior unsecured

3.375%

30 May 2012 BASF SE

None

EUR1400m

Senior unsecured

4.5%

29 Jun 2016 BASF SE

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but only applies to capital market indebtedness.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on capital market indebtedness in excess of EUR75m.
Source: Company data, HSBC

94

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European Credit Research


Corporate Bond Covenants
September 2010

BASF
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

3.75%

08 Oct 2012 BASF SE

None

EUR1350m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

6%

04 Dec 2013 BASF Finance Europe N.V BASF SE

EUR1250m

As above

5%

26 Sep 2014 BASF Finance Europe NV BASF SE

EUR1250m

As above

5.125%

09 Jun 2015 BASF Finance Europe N.V BASF SE

EUR2000m

As above

5.875%

31 Mar 2017 BASF SE

None

GBP400m

As above

4.625%

07 Jul 2017

None

EUR300m

As above

BASF SE

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but only applies to capital market indebtedness.
Put
Put at par on a put event defined as a change of control (acquire or control issued share capital with >50% voting
rights of BASF SE) resulting in a rating downgrade to non-investment grade, a one-notch downgrade if the ratings
are already junk or if ratings are withdrawn by Moodys and S&P.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR75m.
Source: Company data, HSBC

95

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European Credit Research


Corporate Bond Covenants
September 2010

BASF
Bond
Coupon

Maturity

Issuer

4.875%

20 Jun 2018 Ciba Specialty


Chemicals Finance
Luxembourg

Guarantor

Out amt

EUR477m
BASF Specialty
Chemicals Holding
GmbH (previously Ciba
Holding AG)

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but only applies to capital market indebtedness.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of USD50m.
Source: Company data, HSBC

96

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European Credit Research


Corporate Bond Covenants
September 2010

Bayer
Bond
Coupon

Maturity

Issuer

6%

10 Apr 2012 Bayer AG

Guarantor

Out amt

Type

None

EUR2000m

Senior unsecured
issued under the
companys EUR8bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and securitisation up to EUR2bn.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

97

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European Credit Research


Corporate Bond Covenants
September 2010

Bayer
Bond
Coupon

Maturity

4.5%

Issuer

Guarantor

Out amt

Type

23 May 2013 Bayer AG

None

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

4.625%

26 Sep 2014 Bayer Capital


Corporation

Bayer AG

EUR1300m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

5.625%

23 May 2018 Bayer AG

None

GBP350m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Call
Non-callable except for taxation reasons
Negative pledge
Yes, but excludes bank debt and securitisation up to EUR2bn.
Put
Put at par on a put event defined as a change of control (acquire or control >50% issued capital or voting rights of
the Bayer AG) resulting in a rating downgrade to non-investment grade or a one-notch downgrade if the ratings are
already junk.
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

98

abc

European Credit Research


Corporate Bond Covenants
September 2010

Clariant
Bond
Coupon

Maturity

Issuer

4.375%

05 Apr 2013 Clariant Finance


Luxembourg

Guarantor

Out amt

Type

Clariant Ltd

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, in case of put event defined as a change of control resulting in a downgrade to non-investment grade or a onenotch downgrade if the ratings are already non-investment grade. Put at the gross redemption yield of the 4.5%
Bunds due 2013 (or any other reference bond) + 25bp.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor or material subsidiary (gross revenues/total assets>5% of
consolidated revenues/assets) on indebtedness in excess of EUR30m.
Source: Company data, HSBC

99

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dow Chemical
Bond
Coupon

Maturity

Issuer

4.625%

27 May 2011 Dow Chemical

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured
issued under the
companys EUR3.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, includes bank debt.
Put
None
Covenants
Restriction on secured debt (debt secured on principal property + all attributable debt in respect of sale and
leaseback transactions, not to exceed 10% of consolidated net tangible assets).
Other
None
Source: Company data, HSBC

100

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European Credit Research


Corporate Bond Covenants
September 2010

DSM
Bond
Coupon

Maturity

Issuer

4%

10 Nov 2015 Koninklijke DSM NV

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, includes bank debt.
Put
Put at par in case of change of control (defined as acquiring more than 50% of share capital or voting rights)
resulting in a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already
non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer and/or major group company, subject to a carve-out of EUR50m.
Major group company is any group company of the issuer whose net profits or assets exceed 15% of consolidated
net profits or assets.
Source: Company data, HSBC

101

abc

European Credit Research


Corporate Bond Covenants
September 2010

DSM
Bond
Coupon

Maturity

5.75%

5.25%

Issuer

Guarantor

Out amt

Type

17 Mar 2014 Koninklijke DSM NV

None

EUR500m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme.

17 Oct 2017 Koninklijke DSM NV

None

EUR750m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt and covers private and public debt. Private debt is defined as any present or future
indebtedness of the issuer in the form of notes, bonds, debentures or similar securities that are or intended to be
traded on any stock exchange, OTC or other securities market. Private debt refers to loans, debts, guarantees or
other obligations (other than public debt) in excess of EUR50m.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer and/or major group company, subject to a carve-out of EUR50m.
Major group company is any group company of the issuer whose net profits or assets exceed 15% of consolidated
net profits or assets.
Source: Company data, HSBC

102

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European Credit Research


Corporate Bond Covenants
September 2010

Evonik Industries
Bond
Coupon

Maturity

Issuer

5.125%

10 Dec 2013 Degussa AG

Guarantor

Out amt

Type

None

EUR1250m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary (>10% of total assets or operating income) on
indebtedness in excess of EUR25m.
Source: Company data, HSBC

103

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European Credit Research


Corporate Bond Covenants
September 2010

Evonik Industries
Bond
Coupon

Maturity

Issuer

Guarantor

14 Oct 2014 Evonik Industries AG None


7%
Step up
(See Other)

Out amt

Type

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes. Relevant financial indebtedness covers debt issued by Evonik Industries AG or a principal member of the
Evonik Degussa Group (comprising Evonik Degussa GmbH and its material subsidiaries, ie those in which Evonik
Degussa owns at least 50% of the shares and whose unconsolidated turnover represents at least 5% of the
consolidated turnover of the issuer and/or whose unconsolidated assets represent at least 2% of the consolidated
gross assets of the issuer). Financial indebtedness covers loans, bonds and certificates of indebtedness
(Schuldscheine), but excludes finance leases, ABS and derivatives.
Put
Put at par on change of control (ie any person other than RAG-Stiftung or a wholly owned, direct or indirect,
subsidiary of RAG-Stiftung directly or indirectly acquiring more than 50% of the issuers share capital, or directly or
indirectly holding >50% of the voting rights in relation to the issuer).
Covenants
None
Other
Events of default include cross-default of issuer or any of its material subsidiaries on financial indebtedness over
EUR50m, as well as certain asset sales above EUR50m. Coupon steps up by 125bp and remains at this level until
maturity if the bonds have not been rated by at least two rating agencies (among Moodys, S&P, Fitch) before the
first interest payment date (14 October 2010).
Source: Company data, HSBC

104

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European Credit Research


Corporate Bond Covenants
September 2010

GlaxoSmithKline
Bond
Coupon

Maturity

3%

Issuer

Guarantor

Out amt

Type

18 Jun 2012 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

EUR750m

Senior unsecured
issued under the
companys GBP5bn
EMTN programme

5.125%

13 Dec 2012 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

EUR2250m

Senior unsecured
issued under the
companys GBP10bn
EMTN programme.

3.875%

06 jul 2015

GlaxoSmithKline
Capital plc

GlaxoSmithKline plc

EUR1600m

Senior Unsecured
issued under the
companys GBP10bn
EMTN programme

5.625%

13 Dec 2017 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

EUR1250m

Senior unsecured
issued under the
companys GBP10bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (> 10% of group profits before interest
and tax or total assets) on indebtedness in excess of GBP10m.
Source: Company data, HSBC

105

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European Credit Research


Corporate Bond Covenants
September 2010

GlaxoSmithKline
Bond
Coupon

Maturity

4%

Issuer

Guarantor

Out amt

Type

16 Jun 2025 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

EUR750m

Senior unsecured
issued under the
companys GBP5bn
EMTN programme

5.25%

19 Dec 2033 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

GBP1000m

Senior unsecured
issued under the
companys GBP5bn
EMTN programme

6.375%

09 Mar 2039 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

GBP700m

Senior unsecured
issued under the
companys GBP10bn
EMTN programme.

5.25%

10 Apr 2042 GlaxoSmithKline


Capital plc

GlaxoSmithKline plc

GBP1000m

Senior unsecured
issued under the
companys GBP10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (> 10% of group profits before interest
and tax or total assets) on indebtedness in excess of GBP10m.
Source: Company data, HSBC

106

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European Credit Research


Corporate Bond Covenants
September 2010

K+S
Bond
Coupon

Maturity

Issuer

5%

24 Sep 2014 K+S AG

Guarantor

Out amt

Type

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes. Relevant debt covers capital market indebtedness (bonds and similar securities with a maturity of over a year
listed on a stock exchange).
Put
Put at par on change of control, deemed to have occurred when: (i) any person or persons acting in concert
acquire(s) shares carrying >30% of the voting rights (ie control) of the issuer; or (ii) the issuer sells or transfers all or
substantially all of its assets to any person, except a subsidiary; or (iii) in the event of a public tender offer for the
shares of the issuer, shares carrying >50% of the voting rights are either in control of the bidder or have already
been tendered and the offer has become unconditional.
Covenants
None
Other
Events of default include cross-default of the issuer or any other member of the group on capital market indebtedness
(bonds and similar securities with a maturity of over a year listed on a stock exchange) in excess of EUR30m. Events
of default also include the suspension of payments generally by the issuer or a material subsidiary (with
unconsolidated gross revenues and/or total assets representing at least 5% of consolidated gross revenues and/or
total assets, and/or nominated by the issuer to ensure that unconsolidated revenues and/or total assets of all material
subsidiaries and the issuer together represent at least 85% of consolidated gross revenues and/or total assets ).
Source: Company data, HSBC

107

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Corporate Bond Covenants
September 2010

Lanxess
Bond
Coupon

Maturity

4.125%
7.75%

Issuer

Guarantor

Out amt

Type

21 Jun 2012 Lanxess Finance BV Lanxess AG

EUR402m

Senior unsecured

09 Apr 2014 Lanxess Finance BV Lanxess AG

EUR500m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme.

Call
Callable for taxation reasons and at option of issuer @ make whole +10bp (for 2012 bonds) or +25bp (for 2014 bonds).
Negative pledge
Yes, but excludes bank debt and covers capital market indebtedness only.
Put
Put at par if change of control (defined as acquiring more than 50% of share capital or voting rights) results in: (i) a
rating downgrade to non-investment grade; or (ii) a non-investment-grade rating being downgraded further; or (iii)
ratings being withdrawn.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (defined as a subsidiary representing
in excess of 2% of total turnover or assets) on indebtedness in excess of EUR50m.
Source: Company data, HSBC

108

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European Credit Research


Corporate Bond Covenants
September 2010

Linde
Bond
Coupon

Maturity

5.375%

6.75%

Issuer

Guarantor

Out amt

Type

12 Sep 2013 Linde Finance B.V.

Linde AG

EUR300m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme.

08 Dec 2015 Linde Finance B.V.

Linde AG

EUR600m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and covers capital market indebtedness. Capital market indebtedness is defined as any
present or future bonds, notes, or any other similar securities that are or intended to be quoted, listed or traded on
any stock exchange or OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (defined as a subsidiary representing
in excess of 2% of total turnover or assets) on capital indebtedness in excess of EUR25m.
Source: Company data, HSBC

109

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European Credit Research


Corporate Bond Covenants
September 2010

Linde
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

24 Apr 2012 Linde Finance BV

Linde AG

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

4.75%

24 Apr 2017 Linde Finance BV

Linde AG

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

5.875%

24 Apr 2023 Linde Finance BV

Linde AG

GBP300m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer or guarantor or any principal subsidiaries on capital market
indebtedness in excess of EUR25m.
Source: Company data, HSBC

110

abc

European Credit Research


Corporate Bond Covenants
September 2010

Linde
Bond
Coupon

Maturity

Issuer

6.5%

29 Jan 2016 Linde Finance BV


(previously BOC
Group plc)

Guarantor

Out amt

Type

BOC Group Plc

GBP200m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt/bonds initially offered and distributed substantially in the UK.
Put
Yes, if restructuring event (change of control, asset disposals representing more than 50% of group op. profit) leads
to rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary (representing at least 10% of group assets) on
indebtedness in excess of GBP10m.
Source: Company data, HSBC

111

abc

European Credit Research


Corporate Bond Covenants
September 2010

Merck KGaA
Bond
Coupon

Maturity

Issuer

3.75%

07 Dec 2012 Merck Finanz AG

Guarantor

Out amt

Type

Merck KGaA

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR25m.
Source: Company data, HSBC

112

abc

European Credit Research


Corporate Bond Covenants
September 2010

Merck KGaA
Bond
Coupon

Maturity

4.75%
4.875%

Issuer

Guarantor

Out amt

Type

26 Nov 2010 Merck KGaA

None

EUR500m

Senior unsecured

27 Sep 2013 Merck Financial


Services GmbH

Merck KGaA

EUR750m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and covers capital market Indebtedness. Capital market indebtedness is defined as
obligation for the repayment of money in the form of bonds, notes, or any other similar securities that are or intended
to be quoted, listed or traded on any stock exchange or OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer on capital indebtedness in excess of EUR50m (for 2010
bonds)/EUR75m (for 2013 bonds).
Source: Company data, HSBC

113

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European Credit Research


Corporate Bond Covenants
September 2010

Merck KGaA
Bond
Coupon

Maturity

2.125%

Issuer

Guarantor

Out amt

Type

26 Mar 2012 Merck Financial


Services GmbH

Merck KGaA

EUR500m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

3.375%

24 Mar 2015 Merck Financial


Services GmbH

Merck KGaA

EUR1350m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

4.5%

24 Mar 2020 Merck Financial


Services GmbH

Merck KGaA

EUR1350m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers capital market indebtedness. Capital market indebtedness is defined as any obligation for
the payment of borrowed money in the form of bonds, notes, or any other similar securities with an original maturity
of more than one year that are capable of being quoted, listed, dealt in or traded on any stock exchange or other
recognised and regulated securities market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer on capital indebtedness in excess of EUR75m.
Source: Company data, HSBC

114

abc

European Credit Research


Corporate Bond Covenants
September 2010

Novartis
Bond
Coupon

Maturity

Issuer

Guarantor

4.25%

15 Jun 2016 Novartis Finance S.A. Novartis AG

Out amt

Type

EUR1500m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

Call
Call to redeem in whole or in part at a price which is the greater of par or comparable government bond rate + 20bp
Negative pledge
Yes, excludes bank debt/securitisation. Relevant indebtedness covers any bond, note, debenture, or similar instrument
that is, or is capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC
market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of USD150m.
Source: Company data, HSBC

115

abc

European Credit Research


Corporate Bond Covenants
September 2010

PPG Industries
Bond
Coupon

Maturity

Issuer

3.875%

24 Jun 2015 PPG Industries

Guarantor

Out amt

Type

None

EUR300m

Senior unsecured

Call
Callable for taxation reasons and at option of issuer at make whole.
Negative pledge
See covenants.
Put
None
Covenants
Limitations on secured debt and sale and leaseback transactions (should not represent more than 5% of the
shareholders interest), limitations on asset transfers.
Other
Events of default include cross-default of issuer on indebtedness in excess of USD10m.
Source: Company data, HSBC

116

abc

European Credit Research


Corporate Bond Covenants
September 2010

Roche
Bond
Coupon

Maturity

Issuer

Guarantor

04 Mar 2015 Roche Holdings, Inc. Roche Holding Ltd.


5.5%
Step up
(See Other)

Out amt

Type

GBP1250m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

Call
Non-callable except for taxation reasons
Negative pledge
Yes, excludes bank debt. Relevant Indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR100m. Coupon steps up
by 25bp when the rating is downgraded to A3/A and a further 25bp for every one-notch downgrade until
B1/BB-. Similarly, the coupon steps down by 25bp for every one-notch upgrade from B1/BB- to A3/A (where the
coupon will revert to the original 5.5% level). If the rating downgrade/upgrade is done by both Moodys and S&P (or if
one agency withdraws its rating), the step for every one-notch rating change will be 50bp. If both agencies cease to
provide a rating, the initial 5.5% coupon steps up by 200bp. The coupon cannot step up more than 200bp for either
agency (400bp for both agencies).
Source: Company data, HSBC

117

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European Credit Research


Corporate Bond Covenants
September 2010

Roche
Bond
Coupon

Maturity

6.5%

Issuer

Guarantor

Out amt

Type

04 Mar 2021 Roche Holdings, Inc. Roche Holding Ltd.

EUR1750m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

4.625%

04 Mar 2013 Roche Holdings, Inc. Roche Holding Ltd.

EUR5250m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

5.625%

04 Mar 2016 Roche Holdings, Inc. Roche Holding Ltd.

EUR2750m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of EUR100m.
Source: Company data, HSBC

118

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Corporate Bond Covenants
September 2010

Sanofi-Aventis
Bond
Coupon

Maturity

3.5%

Issuer

Guarantor

Out amt

Type

17 May 2013 Sanofi-Aventis

None

EUR1500m

Senior unsecured
issued under the
companys EUR7bn
EMTN programme.

3.125%

10 Oct 2014 Sanofi-Aventis

None

EUR1200m

Senior unsecured
issued under the
companys EUR7bn
EMTN programme.

4.5%

18 May 2016 Sanofi-Aventis

None

EUR1500m

Senior unsecured
issued under the
companys EUR7bn
EMTN programme.

4.125%

10 Oct 2019 Sanofi-Aventis

None

EUR800m

Senior unsecured
issued under the
companys EUR7bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument
listed/traded on any stock exchange or in any securities market and OTC market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries on Indebtedness in excess of EUR100m.
Principal subsidiary is defined as any subsidiary whose sales account for at least 15% of the net consolidated annual
sales of the issuer.
Source: Company data, HSBC

119

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Corporate Bond Covenants
September 2010

Solvay
Bond
Coupon

Maturity

4.875%

Issuer

Guarantor

Out amt

Type

10 Jan 2014 Solvay SA

None

EUR500m

Senior unsecured
issued under the
companys EUR1.5bn
EMTN programme

5%

12 Jun 2015 Solvay SA

None

EUR500m

Senior unsecured

4.625%

27 Jun 2018 Solvay SA

None

EUR500m

Senior unsecured
issued under the
companys EUR1bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt/acquisition debt.
Put
None
Covenants
None
Other
Events of default cover the cross-default of the issuer/material subsidiary on indebtedness in excess of EUR50m.
Material subsidiary is defined as any subsidiary of the issuer whose net sales or net assets constitute at least 5% of
the consolidated net sales or net assets of the issuer and its consolidated subsidiaries.
Source: Company data, HSBC

120

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Corporate Bond Covenants
September 2010

Syngenta
Bond
Coupon

Maturity

4.125%

4.125%

Issuer

Guarantor

Out amt

Type

21 Sep 2011 Syngenta Finance NV Syngenta AG

EUR500m

Senior unsecured
issued under the
companys USD2bn
EMTN programme

22 Apr 2015 Syngenta Lux Finance Syngenta AG

EUR500m

Senior unsecured
issued under the
companys USD2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, if change of control leads to rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of guarantor on indebtedness in excess of USD50m.
Source: Company data, HSBC

121

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European Credit Research


Corporate Bond Covenants
September 2010

Syngenta
Bond
Coupon

Maturity

Issuer

Guarantor

4%

30 Jun 2014 Syngenta Finance NV Syngenta AG

Out amt

Type

EUR500m

Senior unsecured
under the companys
USD3bn EMTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, if change of control leads to: (i) the withdrawal of the rating by any rating agency; or (ii) a rating downgrade to
non-investment grade; or (iii) a rating downgrade when the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of guarantor on indebtedness in excess of USD50m or, if higher, a sum equal
to 0.5% of the consolidated total assets.
Source: Company data, HSBC

122

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Corporate Bond Covenants
September 2010

UCB
Bond
Coupon

Maturity

5.75%
5.75%

Issuer

Guarantor

Out amt

Type

27 Nov 2014 UCB SA

None

EUR750m

Senior unsecured
(retail issue)

10 Dec 2016 UCB SA

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons. Also 15% clean-up call at the put redemption amount if put option is
exercised.
Negative pledge
Negative pledge covers the relevant indebtedness, defined as any bonds, notes, debentures, loan stock or other
similar quoted/listed securities.
Put
Put at the put redemption amount on a change of control (any person other than the excepted persons the
reference shareholder of the group obtaining control over >50% of the issuers voting rights) if the issuer is either
not rated or its rating is downgraded within the change of control period. The put redemption amount reflects a
maximum yield of 0.75 points above the yield of the bonds on the issue date up to the maturity date, in accordance
with Belgian law.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness exceeding EUR30m.
Source: Company data, HSBC

123

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Corporate Bond Covenants
September 2010

Urenco
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.375%

22 May 2015 Urenco Finance NV

EUR500m
Urenco Ltd, Urenco
(Capenhurst) Ltd
(renamed Urenco UK
Ltd), Urenco Nederland
BV, Urenco Deutschland
GmbH

Senior unsecured
issued under the
companys EUR1.5bn
EMTN programme

4%

05 May 2017 Urenco Finance NV

Urenco Ltd, Urenco UK EUR500m


Ltd, Urenco Nederland
BV, Urenco Deutschland
GmbH

Senior unsecured
issued under the
companys EUR1.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture stock, or similar instrument
listed/traded on any stock exchange or in any securities market and OTC market.
Put
Put at par if an amendment event or a change of control occurs, and within 90 days if a rating downgrade occurs. An
amendment event is deemed to occur each time the Almelo Treaty or the shareholders agreement is agreed by all
its respective parties to be amended or is terminated. A change of control is deemed to occur if the current
shareholders (UK and Dutch governments, RWE and E.ON) together cease to own more than 50% of the share
capital (or voting rights) of the issuer. Rating downgrade refers to a downgrade to non-investment grade if ratings are
currently investment grade, a rating downgrade of at least one notch if ratings are currently non-investment grade
already, or no credit rating assignment.
Covenants
None
Other
Events of default include cross-default of issuer/guarantors/guarantors principal subsidiaries (with PBT and/or turnover
and/or assets over 10% of the groups) on any indebtedness for borrowed money in excess of 4.5% of total equity.
Source: Company data, HSBC

124

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Corporate Bond Covenants
September 2010

abc

Diversified Industrials
& Business Services

125

abc

European Credit Research


Corporate Bond Covenants
September 2010

Adecco
Bond
Coupon

Maturity

Issuer

Guarantor

4.5%

25 Apr 2013 Adecco International Adecco SA


Financial Services BV

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in case of change of control resulting in a downgrade to non-investment grade or a one-notch downgrade
at least if the ratings are already non-investment grade
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/subsidiaries (representing more than 10% of consolidated
revenues) on indebtedness in excess of EUR20m.
Source: Company data, HSBC

126

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Corporate Bond Covenants
September 2010

Adecco
Bond
Coupon

Maturity

Issuer

Guarantor

28 Apr 2014 Adecco International Adecco SA


7.625%
Step up
Financial Services BV
(See Other)

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt. Relevant indebtedness covers notes, bonds, debentures or other securities which, in
connection with their initial distribution, are or are intended to be quoted, listed or traded on any stock exchange OTC
or other securities market.
Put
Put at par in event of change of control (control of >50% of voting rights of the issuer) resulting in a downgrade to
non-investment grade, a one-notch downgrade at least if the ratings are already non-investment grade, a withdrawal
of ratings and (if no credit rating) no rating assignment by Fitch, Moodys or S&P.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/subsidiaries on indebtedness in excess of EUR20m or
equivalent to or greater than 2% of the consolidated shareholder equity of the guarantor. Coupon steps up by 125bp
if rating is downgraded to non-investment grade by Moodys or S&P, steps down if upgraded back to investment
grade by both agencies.
Source: Company data, HSBC

127

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Corporate Bond Covenants
September 2010

Bouygues
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

25 Feb 2011 Bouygues SA

None

EUR750m

Senior unsecured

4.375%

29 Oct 2014 Bouygues SA

None

EUR1000m

Senior unsecured

4.25%

22 Jul 2020

None

EUR1000m

Senior unsecured

Bouygues SA

Call
Non-callable except for taxation reasons.
Negative pledge
Yes. Relevant debt covers debt instruments (including convertibles) which are (capable of being) listed, quoted or
traded on any stock exchange, or OTC or other securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on relevant indebtedness (excludes bank debt) in excess of EUR15m.
Source: Company data, HSBC

128

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Corporate Bond Covenants
September 2010

Bouygues
Bond
Coupon

Maturity

4.5%

Issuer

Guarantor

Out amt

Type

24 May 2013 Bouygues SA

None

EUR1150m

Senior unsecured

6.125%

03 Jul 2015

Bouygues SA

None

EUR1000m

Senior unsecured

4.75%

24 May 2016 Bouygues SA

None

EUR600m

Senior unsecured

4%

12 Feb 2018 Bouygues SA

None

EUR500m

Senior unsecured

5.5%

06 Oct 2026 Bouygues SA

none

GBP400m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes. Relevant debt covers debt instruments (including convertibles) which are (capable of being) listed, quoted or
traded on any stock exchange, or OTC or other securities market.
Put
Put at par on change of control (any person or persons acting in concert other than a permitted holding company
owning or acquiring shares carrying >50% of the voting rights of the issuer), accompanied by a rating downgrade to
non-investment grade, or a full-notch downgrade if ratings are already non-investment grade, or a withdrawal of the
rating. Permitted holding companies are defined as entities whose share capital/voting rights are controlled by Martin
Bouygues and/or Olivier Bouygues and their heirs, successors and/or beneficiaries.
Covenants
None
Other
Events of default include cross-default of issuer on relevant debt exceeding EUR15m.
Source: Company data, HSBC

129

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Corporate Bond Covenants
September 2010

Cargill
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

29 Apr 2013 Cargill Inc

None

EUR750m

Senior unsecured
issued under the
companys USD2bn
EMTN programme

4.5%

29 Sep 2014 Cargill Inc

None

EUR500m

Senior unsecured
issued under the
companys USD1bn
EMTN programme

4.875%

29 May 2017 Cargill Inc

None

EUR500m

Senior unsecured
issued under the
companys USD5bn
EMTN programme

5.375%

02 Mar 2037 Cargill Inc

None

GBP150m

Senior unsecured
issued under the
companys USD3bn
EMTN Programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, includes bank debt.
Put
None
Covenants
Restriction on secured debt (debt secured on principal property + all attributable debt in respect of sale and
leaseback transactions, not to exceed 5% of consolidated net tangible assets).
Other
Events of default include cross-default of issuer/restricted subsidiary on indebtedness in excess of USD50m.
Source: Company data, HSBC

130

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Corporate Bond Covenants
September 2010

G4S
Bond
Coupon

Maturity

Issuer

13 May 2019 G4S plc


7.75%
Step up
(See Other)

Guarantor

Out amt

Type

None

GBP350m

Senior unsecured
issued under the
companys GBP2bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness is defined as any present or future indebtedness of the issuer or
guarantor in the form of notes, bonds or similar securities that are or intended to be traded on any stock exchange,
OTC or other securities market, having an original maturity of over one year from date of issue.
Put
Put at par on a put restructuring event resulting in a rating downgrade to non-investment grade or withdrawn or a
one-notch downgrade if the ratings are already junk. Restructuring event refers to a change of control whereby the
relevant person is/are or become/s interested in excess of 50% of issued share capital of the issuer or holding
company or carries more than 50% of voting rights.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary on indebtedness in excess of GBP25m.
Principal subsidiary is defined as any company with excess of 5% of consolidated EBIDTA or consolidated total assets
of the group. Coupon steps up by 125bp in the event of a downgrade to non-investment grade, steps down following an
upgrade back to investment grade. The step-up rating change may only occur once during the term of the notes.
Source: Company data, HSBC

131

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Corporate Bond Covenants
September 2010

Hutchison Whampoa
Bond
Coupon

Maturity

Issuer

Guarantor

6.75%

07 Dec 2015 Hutchison Ports (UK) Hutchison Whampoa


Finance plc
Limited

Out amt

Type

GBP325m

Senior unsecured

Call
Yes at the higher of par or UKT 8% 2015 + standard tax call.
Negative pledge
See covenants for limit on secured borrowings.
Put
None
Covenants
Limitation on borrowings (secured borrowings of issuer/guarantor + all borrowings of subsidiaries not to exceed 50%
of adj. capital and reserves) + restrictions on disposals of assets (value of assets disposed of not to exceed 30% of
Group assets) + restriction on dividend payments + EBITDA/consolidated net interest expense should exceed 2x.
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (representing more than 20% of
consolidated net profits or net assets) on indebtedness in excess of GBP15m.
Source: Company data, HSBC

132

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Corporate Bond Covenants
September 2010

Hutchison Whampoa
Bond
Coupon

Maturity

Issuer

Guarantor

5.875%

08 Jul 2013

Hutchison Whampoa Hutchison Whampoa


Finance Ltd
Limited

4.125%

28 Jun 2015 Hutchison Whampoa Hutchison Whampoa


Finance Ltd
Limited

Out amt

Type

EUR1000m

Senior unsecured

EUR603m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, includes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (representing more than 5% of
consolidated net profits or net assets) on indebtedness in excess of USD30m.
Source: Company data, HSBC

133

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Corporate Bond Covenants
September 2010

Hutchison Whampoa
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.75%

14 Nov 2016 Hutchison Whampoa Hutchison Whampoa Ltd EUR1750m


Finance (09) Ltd

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers indebtedness for borrowed money (including bank debt).
Put
None
Covenants
Limitation on secured borrowings (secured indebtedness for borrowed money not to exceed 50% of the guarantors
adjusted consolidated net worth).
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (representing more than 5% of
consolidated net profits or net assets) on indebtedness in excess of USD30m.
Source: Company data, HSBC

134

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Corporate Bond Covenants
September 2010

Ifil
Bond
Coupon

Maturity

Issuer

5.375%

12 Jun 2017 Ifil Spa

Guarantor

Out amt

Type

None

EUR750m

Senior unsecured

Call
Non-callable except for tax reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at 101 in case of change of control.
Covenants
None
Other
Events of default include cross-default of issuer or consolidated subsidiary on indebtedness for borrowed money in
excess of USD30m.
Source: Company data, HSBC

135

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Corporate Bond Covenants
September 2010

Investor
Bond
Coupon

Maturity

4.875%

5.5%

Issuer

Guarantor

Out amt

Type

18 Nov 2021 Investor AB

None

EUR500m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

05 May 2037 Investor AB

None

GBP275m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on borrowed money in excess of USD50m.
Source: Company data, HSBC

136

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Corporate Bond Covenants
September 2010

Investor
Bond
Coupon

Maturity

Issuer

4%

14 Mar 2016 Investor AB

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured
issued under the
companys USD4bn
EMTN programme

Call
Callable at the higher of par or B+10bp.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on borrowed money in excess of USD50m.
Source: Company data, HSBC

137

abc

European Credit Research


Corporate Bond Covenants
September 2010

Maersk
Bond
Coupon

Maturity

Issuer

Guarantor

4.875%

30 Oct 2014 A.P. Mller - Mrsk A/S None

Out amt

Type

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons. Also 20% clean-up call at par if put option is exercised.
Negative pledge
No negative pledge and no restriction on the amount of debt that the issuer or any other member of the group can
incur. Any such debt may be secured and thus rank in priority to the bonds.
Put
Put at par upon occurrence of a put event (deemed to have occurred if shares in the issuer are transferred to an
acquirer and such transfer results in an obligation for the acquirer to make a mandatory offer to all shareholders of
the issuer in accordance with section 3 of the Danish Securities Trading Act).
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of USD35m.
Source: Company data, HSBC

138

abc

European Credit Research


Corporate Bond Covenants
September 2010

Motability
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.25%

28 Sep 2016 Motability Operations Motability Operations Limited GBP500m


Group plc
(MOL), Motability Leasing
Limited and Motability Hire
Purchase Limited

6.625%

10 Dec 2019 Motability Operations Motability Operations Limited GBP450m As above


Group plc
(MOL), Motability Leasing
Limited and Motability Hire
Purchase Limited

5.375%

28 Jun 2022 Motability Operations Motability Operations Limited GBP400m As above


Group plc
(MOL), Motability Leasing
Limited and Motability Hire
Purchase Limited

Senior unsecured
issued under the
companys GBP2bn
EMTN programme

Call
At full spens: the issuer redeems the notes on giving not less than 30 and not more than 60 days notice; if MOL gives
a service agreement termination notice (SATR), bondholders have an immediate put option at spens. At modified
spens (the higher of 100% of the principal amount and 50% of the spens price described), if a SATR is given by
Motability, with a notice period of seven years; in this case, bondholders have the option to put 30 days before
termination if the maturity of the bonds is greater than seven years. If the notice period is three months, bondholders
have the option to put after three months. Reference stocks UKT 4% due September 2016, UKT 4.5% due March
2019 and UKT 4% due March 2022, respectively, for the three bonds above. Also callable for taxation reasons.
Negative pledge
Yes. The issuer shall ensure that no member of the group will grant security over its assets or sell, transfer or
dispose of any of its receivables in a preferential manner (unless the principal amount of that indebtedness is 10% or
less of total group assets).
Put
See Call above.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on financial indebtedness in excess of GBP25m. Crossdefault also applies if any group member fails to perform or observe any of its obligations under the conditions or the
trust deed for a period of 30 days.
Source: Company data, HSBC

139

abc

European Credit Research


Corporate Bond Covenants
September 2010

Rentokil
Bond
Coupon

Maturity

4.625%

5.75%

Issuer

Guarantor

Out amt

Type

27 Mar 2014 Rentokil Initial plc

None

EUR500m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme

31 Mar 2016 Rentokil Initial plc

None

GBP300m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in case of put event defined as change of control resulting in a rating downgrade to non-investment grade.
Furthermore, a put event is triggered if there is a change of control and the bonds carry a non-investment grade
rating or no rating at the time of the change of control.
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (representing more than 10% of consolidated
op. profits) on indebtedness in excess of GBP20m.
Source: Company data, HSBC

140

abc

European Credit Research


Corporate Bond Covenants
September 2010

Rexam
Bond
Coupon

Maturity

Issuer

15 Mar 2013 Rexam plc


4.375%
Step up
(See Other)

Guarantor

Out amt

Type

None

EUR698m

Senior unsecured
issued under the
companys GBP1bn
Global MTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, put at par in the event of change of control and subsequent downgrade to non-investment grade (if ratings are
IG) or subsequent downgrade by one or two notches if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (representing more than 15% of consolidated
turnover/consolidated assets) on indebtedness in excess of GBP25m or if greater 3% of the consolidated net assets;
the coupon steps up by 125bp if rating downgraded to non-investment grade by either S&P or Moodys, steps down
if upgraded back to investment grade.
Source: Company data, HSBC

141

abc

European Credit Research


Corporate Bond Covenants
September 2010

Securitas
Bond
Coupon

Maturity

Issuer

6.5%

02 Apr 2013 Securitas AB

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured
issued under the
companys EUR1.5bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
Put at par on change of control (defined as acquiring more than 50% of share capital or voting rights) resulting in a
rating downgrade to non-investment grade, withdrawn or if already non-investment grade, lowered by at least one full
rating notch.
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries on indebtedness for borrowed money in
excess of EUR25m.
Source: Company data, HSBC

142

abc

European Credit Research


Corporate Bond Covenants
September 2010

TNT
Bond
Coupon

Maturity

Issuer

3.875%

01 Jun 2015 TNT NV

Guarantor

Out amt

Type

None

EUR400m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or
is capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market of
the Issuer and its material subsidiaries.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR25m.
Source: Company data, HSBC

143

abc

European Credit Research


Corporate Bond Covenants
September 2010

TNT
Bond
Coupon

Maturity

Issuer

5.375%

14 Nov 2017 TNT NV

Guarantor

Out amt

Type

None

EUR650m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market and
which does not constitute limited-recourse Indebtedness.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR25m.
Source: Company data, HSBC

144

abc

European Credit Research


Corporate Bond Covenants
September 2010

TNT
Bond
Coupon

Maturity

Issuer

14 Aug 2018 TNT NV


7.5%
Step up
(See Other)

Guarantor

Out amt

Type

None

GBP450m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market of the
Issuer and its material subsidiaries.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights of the
Issuer) resulting in a rating downgrade to non-investment grade or withdrawn or a one-notch downgrade if already
non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR25m. Material
subsidiary is seen as any subsidiary that represents at least 10% of the consolidated turnover, tangible net worth or
consolidated net profits before interest and tax of the issuer and its consolidated subsidiaries based upon the latest
audited consolidated financial statements of the Issuer. During put event period, coupon steps up by 25bp for each full
rating category below BBB+/Baa1; it steps up no further than 50bp. If done by two rating agencies, or not assigned a
rating, or if one agency downgrades it to non-investment grade and another withdraws or does not assign a rating
during the put event period, it steps up by 100bp. Steps down by 25bp if upgraded back to investment grade for every
full rating change until the rate of interest equals the initial interest rate. The agencies refer to Moodys and S&P.
Source: Company data, HSBC

145

abc

European Credit Research


Corporate Bond Covenants
September 2010

Votorantim
Bond
Coupon

Maturity

Issuer

5.25%

28 Apr 2017 Voto-Votorantim Ltd

Guarantor

Out amt

Type

Votorantim
Participacoes SA,
Votorantim Cimentos
Brasil SA, Companhia
Brasileira de Aluminio

EUR750m

Senior unsecured

Call
Callable at par for taxation reasons. Also callable at the option of the issuer (with not less than 30 nor more than 60
days notice) at make whole + 50bp.
Negative pledge
See covenants for limitations on liens.
Put
Put at 101 in case of change of control resulting in a rating decline (downgrade to non-investment grade by either
agencies or downgrade by one notch or more if the ratings are already non-investment grade).
Covenants
Covenants relate to the creation of liens (subject to exceptions), provision of financial information and mergers,
consolidation and certain sales of assets (all subject to important exceptions).
Other
Events of default include cross-default of issuer or guarantors on indebtedness exceeding USD50m.
Source: Company data, HSBC

146

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wendel
Bond
Coupon

Maturity

5%
4.875%

Issuer

Guarantor

Out amt

Type

16 Feb 2011 Wendel Investissement SA None

EUR396m

Senior unsecured

04 Nov 2014 Wendel Investissement SA None

EUR700m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, Put at higher of par and reference bond +25bp in case of put event defined as a change of control resulting in a
rating downgrade to non-investment grade or at least a one-notch downgrade if the ratings are already junk.
Covenants
None
Other
Events of default include cross-default of issuer on relevant indebtedness (excludes bank debt) in excess of EUR20m.
Source: Company data, HSBC

147

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wendel
Bond
Coupon

Maturity

4.875%

Issuer

Guarantor

Out amt

Type

21 Sep 2015 Wendel Investissement SA None

EUR400m

Senior unsecured

4.875%

26 May 2016 Wendel Investissement SA None

EUR400m

Senior unsecured

4.375%

09 Aug 2017 Wendel Investissement SA None

EUR700m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, Put at higher of par and reference bond +25bp in case of put event defined as a change of control resulting in a
rating downgrade to non-investment grade or at least a one-notch downgrade if the ratings are already junk.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR80m.
Source: Company data, HSBC

148

European Credit Research


Corporate Bond Covenants
September 2010

abc

Infrastructure

149

abc

European Credit Research


Corporate Bond Covenants
September 2010

Abertis
Bond
Coupon

Maturity

4.75%

Issuer

Guarantor

Out amt

Type

11 Feb 2014 Abertis Infraestructuras SA None

EUR450m

Senior unsecured

4.625%

14 Oct 2016 Abertis Infraestructuras SA None

EUR1000m

Senior unsecured

5.125%

12 Jun 2017 Abertis Infraestructuras SA None

EUR1000m

Senior unsecured

4.375%

30 Mar 2020 Abertis Infraestructuras SA None

EUR540m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the debt of the issuer subject to a carve out of 25% of total assets unless approved
otherwise by the syndicate of noteholders.
Put
None
Covenants
None
Other
None
Source: Company data, HSBC

150

abc

European Credit Research


Corporate Bond Covenants
September 2010

Abertis
Bond
Coupon

Maturity

Issuer

4.875%

27 Oct 2021 HIT Finance BV

Guarantor

Out amt

Type

HIT SAS

EUR1500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, the guarantor and material subsidiaries. Relevant
Indebtedness is defined as public debt excluding limited recourse borrowings. Material subsidiary means SANEF
and any other subsidiary accounting for 10% of the guarantors gross revenues and assets. The definition excludes
permitted security interests, which include security interests existing on 27 October 2006 as well as project finance.
Put
Put at par plus accrued interests if: (i) There is a change of control resulting in a downgrade of the notes to non
investment grade or a one-notch downgrade if the notes already carry a non-IG rating over the period starting on the
change of control date and ending 120 days thereafter. A change of control is defined as: (a) Abertis Infraestructuras
SA holding less than 40% of the shares or voting rights in HIT SAS; or (b) a change in the share or voting rights
ownership that would cause any person or group of persons interest in HIT to be higher than Abertis; or (ii) the
concession held by Sanef or any future concession subsidiary is terminated, revoked or suspended; or (iii) HIT
reduces its direct or indirect shareholding in Sanef to below 95%.
Covenants
None
Other
Event of default covers the debt of the issuer, guarantor and material subsidiaries subject to a carve out of EUR25m.
Material change in business.
Source: Company data, HSBC

151

abc

European Credit Research


Corporate Bond Covenants
September 2010

ADP
Bond
Coupon

Maturity

Issuer

Guarantor

6.375%

24 Jan 2014 Aeroports de Paris SA ADP None

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on Put event defined as a change of control (50% or more issued capital or voting rights of issuer or 40%
of voting rights with others having a minority stake <40%) resulting in a rating downgrade to non-investment grade or
a full rating notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness exceeding EUR100m.
Source: Company data, HSBC

152

abc

European Credit Research


Corporate Bond Covenants
September 2010

Atlantia
Bond
Coupon

Maturity

Issuer

5.625%

06 May 2016 Atlantia SpA

Guarantor

Out amt

Type

Autostrade per lItalia


SpA

EUR1500m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, it covers the relevant indebtedness of the issuer, guarantor and its material subsidiaries. Relevant indebtedness
is defined as in the form of, or represented by, bonds, notes, debentures, or other securities, present or future,
quoted, listed ordinarily dealt in on any stock exchange or any other securities market or OTC.
Put
Put at par if: (a) the Autostrade Italia Concession or the Single Concession Contract is terminated or revoked in
accordance with its terms or for public interest reasons; or (b) a ministerial decree has been enacted granting to
another person the Autostrade Italia Concession; or (c) it becomes unlawful for Autostrade Italia to perform any of
the material terms of the Autostrade Italia Concession; or (d) the Autostrade Italia Concession is declared by the
competent authority to cease before the maturity date; or (e) the Autostrade Italia Concession ceases to be held by
Autostrade Italia or any successor resulting from a permitted reorganisation; or (f ) the Autostrade Italia Concession
is amended in a way which has a material adverse effect.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR50m. Material
subsidiary is defined as any member of the group which accounts for more than 10% of the consolidated assets or
consolidated revenues of the group.
Source: Company data, HSBC

153

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Corporate Bond Covenants
September 2010

Atlantia
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5%

09 Jun 2014 Atlantia SpA

Autostrade per lItalia SpA EUR2750m

Senior unsecured

6.25%

09 Jun 2022 Atlantia SpA

Autostrade per lItalia SpA GBP500m

Senior unsecured

5.875%

09 Jun 2024 Atlantia SpA

Autostrade per lItalia SpA EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers relevant debt of the issuer, the guarantor and their material subsidiaries, subject to a carveout representing 10% of the total net equity of Autostrade. Relevant debt is defined as debt represented by bonds,
notes, debentures or securities quoted, listed on any securities market including OTC. Material subsidiaries are
defined as members of the group accounting for more than 10% of consolidated assets or consolidated revenues.
The definition excludes permitted encumbrances, mainly project finance indebtedness.
Put
Put at par plus accrued interest upon occurrence of a put event defined as: (i) the 1997 Autostrade Italia Concession
agreement being terminated or revoked; or (ii) a ministerial decree granting the concession to another person; or (iii)
the competent authority declaring that the concession ceases prior to the bond maturity date; or (iv) the concession
ceasing to be held by Autostrade Italia or any successor resulting from a permitted reorganisation; or (v) the
concession being amended in a way that has a material adverse effect (as defined in the event of default section).
Covenants
None
Other
Events of default cover the obligations of the issuer, guarantor and material subsidiaries subject to a EUR50m carveout. Nationalisation of a material part of the issuer or the guarantors assets with a material adverse effect is also an
event of default as is Autostrade Italia ceasing to be controlled by Autostrade or any successor resulting from a
permitted reorganisation. Material subsidiaries are defined as members of the group accounting for more than 10%
of consolidated assets or consolidated revenues.
Source: Company data, HSBC

154

abc

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Corporate Bond Covenants
September 2010

Autoroutes Paris Rhin Rhone (APRR)


Bond
Coupon

Maturity

Issuer

Guarantor

12 Jan 2015 Societe des


None
7.5%
Step up
Autoroutes Paris Rhin
(See Other)
Rhone APRR

Out amt

Type

EUR700m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme.

Call
Non-callable except for taxation reasons
Negative pledge
Yes, excludes bank debt. Relevant Indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market and
which does not constitute limited-recourse indebtedness.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default cover the default of the issuer and/or of Societe des Autoroutes Rhones Alpes for indebtedness in
excess of EUR35m. Coupon steps up by 125bp if rating is downgraded to non-investment grade by Moodys or S&P
or withdrawn by both, steps down if upgraded back to investment grade by both agencies.
Source: Company data, HSBC

155

abc

European Credit Research


Corporate Bond Covenants
September 2010

BAA
Bond Special coupon provisions apply (see Other)
Coupon

Maturity

3.975%
4.6%

Issuer

Guarantor

Out amt

Type

15 Feb 2012 BAA Funding Limited BAA Airports Limited

EUR1000m

Class A

15 Feb 2018 BAA Funding Limited BAA Airports Limited

EUR750m

Class A

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its principal subsidiaries. Relevant indebtedness
is defined as indebtedness for borrowed money evidenced by bonds, notes, loan stock or other securities with an
original maturity of less than 20 years, publicly offered and placed, and quoted listed on any stock exchange or OTC.
The definition excludes secured loans evidenced by certificates in registered form denominated in sterling and
distributed primarily to investors in the UK. A principal subsidiary is defined as a subsidiary accounting for 10% of
consolidated tangible net worth.
Put
Put at par plus accrued interest if the bonds (or, if the bonds are unrated, any rated unsecured debt of the issuer with
a five-year initial maturity) are downgraded by Moodys or S&P to below investment grade as a result of a
restructuring event. A restructuring event is defined as a change of control (any person or persons becoming
interested in more than 50% of BAAs shares or voting rights) when within the restructuring period (90 days) there is
a rating downgrade to below investment grade by either S&P or Moodys, and an independent financial advisor
certifies that such a restructuring event is materially prejudicial to the interests of bondholders.
Covenants
The disposal of a guaranteeing subsidiary is subject to compliance with either of the financial covenants defined in
the 2031 bond documentation.
Other
The maturity date above is formally known as the scheduled redemption date. If the bond is not redeemed on the
scheduled redemption date, it remains outstanding until its legal maturity date, which is two years later than the
scheduled redemption date. During this two-year period, the coupon will be based on a floating rate plus 4% per
annum. Event of default covers the debt of the issuer, principal subsidiaries and guaranteeing subsidiaries subject to
a GBP50m carve-out. A principal subsidiary is defined as a subsidiary accounting for 10% of consolidated tangible
net worth or turnover. It is an event of default if the issuer, any principal subsidiary or any guaranteeing subsidiary
ceases or threatens to cease to carry on all or substantially all of its business.
Source: Company data, HSBC

156

abc

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Corporate Bond Covenants
September 2010

BAA
Bond Special coupon provisions apply (see Other)
Coupon

Maturity

Issuer

Guarantor

5.85%

27 Nov 2013 BAA Funding Limited BAA Airports Limited

Out amt

Type

GBP400m

Class A

Call
Spens Call ref UKT 5% 2014.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its principal subsidiaries. Relevant Indebtedness
is defined as indebtedness for borrowed money evidenced by bonds, notes, loan stock or other securities with an
original maturity of less than 20 years, publicly offered and placed and quoted listed on any stock exchange or OTC.
The definition excludes secured loans evidenced by certificates in registered form denominated in sterling and
distributed primarily to investors in the UK. A principal subsidiary is defined as a subsidiary accounting for 10% of
consolidated tangible net worth.
Put
Put at par plus accrued interest if, as a result of restructuring event, the bonds or any unsecured debt of the issuer
with a five-year initial maturity are downgraded by Moodys or S&P to below investment grade. A restructuring event
is defined as operating airports ceasing to be the major part of the business of BAA and its subsidiaries.
Covenants
The disposal of guaranteeing subsidiaries is subject to compliance with either financial covenants defined in the
2031 bond documentation.
Other
The maturity date above is formally known as the scheduled redemption date. If the bond is not redeemed on the
scheduled redemption date, it remains outstanding until its legal maturity date, which is two years later than the
scheduled redemption date. During this two-year period, the coupon will be based on a floating rate plus 4% per
annum. Event of default covers the debt of the issuer, principal subsidiaries and guaranteeing subsidiaries subject to
a GBP50m carve-out. A principal subsidiary is defined as a subsidiary accounting for 10% of consolidated tangible
net worth or turnover. It is an event of default if the issuer, any principal subsidiary or any guaranteeing subsidiary
ceases or threatens to cease to carry on all or substantially all of its business.
Source: Company data, HSBC

157

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Corporate Bond Covenants
September 2010

BAA
Bond Special coupon provisions apply (see Other)
Coupon

Maturity

4.6%

Issuer

Guarantor

Out amt

Type

30 Sep 2014 BAA Funding Limited BAA Airports Limited

EUR750m

Class A

12.45%

31 Mar 2016 BAA Funding Limited BAA Airports Limited

GBP300m

Class A

6.25%

10 Sep 2018 BAA Funding Ltd

GBP400m

Class B

9.2%

29 Mar 2021 BAA Funding Limited None

GBP250m Class A

5.225%

15 Feb 2023 BAA Funding Limited None

GBP750m

Security group

Class A

Call
Tax call. Also spens call for certain bonds with reference gilt; UKT 12% 2017 (for 2016 bonds); UKT 8.75% 2017 (for
2021 bonds); UKT 5% 2025 (for 2023 bonds);
Negative pledge
The class A bonds rank pari passu among each other in terms of interest and principal payments, and rank in priority
to the class B bonds. Further incurrence of indebtedness is possible if the senior RAR(ratio of senior indebtedness to
regulated asset base) is less than 0.725 and the junior RAR must be less than 0.90. In addition, there are provisions
which restrict the amount of indebtedness which can fall due: (a) within any 24-month period to 30% of total RAB
(regulated asset base); and (b) within any five-year period to 50% of total RAB.
Put
Not applicable
Covenants
Trigger events include: (1) breach of the following financial ratios: the senior RAR at any relevant date is more than
0.70 prior to 1 April 2018, or 0.725 thereafter; the Junior RAR at any relevant date is more than 0.85; the senior ICR
for each relevant period is less than 1.4; and the junior ICR for each relevant period is less than 1.2; (2) a credit
rating downgrade of the class A bonds below BBB+ and a credit rating downgrade of the class B bonds below BBB-;
(3) forecast capital expenditure over the 12-month period following a calculation date exceeds the aggregate of
undrawn capex facilities, cash and projected excess cash flow before capex over such 12-month period; (4) the
amount available under the issuers liquidity facilities/any cash liquidity reserve is less than the estimated interest
and equivalent finance charges for: (a) the 12-month period following a calculation date in respect of issuer senior
debt; and (b) the six-month period following a calculation date in respect of issuer junior debt; (5) any compliance,
legislation, or licence issues related to the regulator that could have material adverse effect.
Other
The maturity dates above marked with * are formally known as the scheduled redemption dates. If the bonds have
not been redeemed on the scheduled redemption date, they remain outstanding until their legal maturity date, which
is two years later than the scheduled redemption date. During this two-year period, the coupon will be 12-month
LIBOR plus 4% per annum (for the 2026 bond) and 6-month LIBOR plus 4% per annum (for the 2039 bond).
Source: Company data, HSBC

158

abc

European Credit Research


Corporate Bond Covenants
September 2010

BAA
Bond Special coupon provisions apply (see Other)
Coupon

Maturity

Issuer

6.75%

03 Dec 2026* BAA Funding Ltd

7.075%

04 Aug 2028 BAA Funding Limited None

GBP200m Class A

6.45%

10 Dec 2031 BAA Funding Limited None

GBP900m Class A

3.334% + RPI 09 Dec 2039* BAA Funding Ltd

Guarantor

Out amt

Type

Security group

GBP700m

Class A (sub-class A-10)

Security group

GBP235m

Class A (SUB-class A-11)

Call
Tax call. Also spens call with reference gilt UKT 5% 2025 (for 2026 bonds); UKT 6% 2028 (for 2028 bonds);
UKT 4.25% 2032 (for 2031 bonds); UKT 1.125% 2037 (for 2039 bonds)
Negative pledge
The class A bonds rank pari passu among each other in terms of interest and principal payments, and rank in priority
to the class B bonds. Further incurrence of indebtedness is possible if the senior RAR (ratio of senior indebtedness
to regulated asset base) is less than 0.725 and the junior RAR must be less than 0.90. In addition, there are
provisions which restrict the amount of indebtedness which can fall due: (a) within any 24-month period to 30% of
total RAB (regulated asset base); and (b) within any five-year period to 50% of total RAB.
Put
Not applicable
Covenants
Trigger events include: (1) breach of the following financial ratios: the senior RAR at any relevant date is more than
0.70 prior to 1 April 2018, or 0.725 thereafter; the Junior RAR at any relevant date is more than 0.85; the senior ICR
for each relevant period is less than 1.4; and the junior ICR for each relevant period is less than 1.2; (2) a credit
rating downgrade of the class A bonds below BBB+ and a credit rating downgrade of the class B bonds below BBB-;
(3) forecast capital expenditure over the 12-month period following a calculation date exceeds the aggregate of
undrawn capex facilities, cash and projected excess cash flow before capex over such 12-month period; (4) the
amount available under the issuers liquidity facilities/any cash liquidity reserve is less than the estimated interest
and equivalent finance charges for: (a) the 12-month period following a calculation date in respect of issuer senior
debt; and (b) the six-month period following a calculation date in respect of issuer junior debt; (5) any compliance,
legislation, or licence issues related to the regulator that could have material adverse effect.
Other
The maturity dates above marked with * are formally known as the scheduled redemption dates. If the bonds have
not been redeemed on the scheduled redemption date, they remain outstanding until their legal maturity date, which
is two years later than the scheduled redemption date. During this two-year period, the coupon will be 12-month
LIBOR plus 4% per annum (for the 2026 bond) and 6-month LIBOR plus 4% per annum (for the 2039 bond).
Source: Company data, HSBC

159

abc

European Credit Research


Corporate Bond Covenants
September 2010

Brisa
Bond
Coupon

Maturity

Issuer

Guarantor

4.5%

05 Dec 2016 Brisa Auto Estradas None


de Portugal SA

Out amt

Type

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and principal subsidiaries. It also limits the amount of
assets owned by the Issuer, the concession holder and principal subsidiaries that can be secured by indebtedness to
20% of consolidated total assets by reference to the most recent published financial statements. Relevant
indebtedness is defined as public debt. Indebtedness covers all borrowed money as well as leases. Principal
subsidiaries are subsidiaries whose gross assets or revenues account for more than 20% of consolidated gross
assets or revenues, respectively.
Put
Put at par plus accrued interests if: (i) the concession is revoked and as a result, the ratings on the notes or other
rated securities are withdrawn or downgraded to non-IG by Moodys or S&P; or (ii) a change of control happens and,
as a result, the ratings on the notes or other rated securities are withdrawn or downgraded to non-IG by Moodys or
S&P during the change of control period. A change of control is defined as the direct or indirect acquisition by a
person/group of persons of more than 50% of shares or voting rights or the control over the majority of the board.
The change of control period starts with the earlier of: (a) the potential change of control announcement; or (b) the
change of control, and ends 120 days after the date in (a) and (b) as the case may be.
Covenants
None
Other
Event of default covers the debt of the issuer, concession holder and principal subsidiaries subject to a carve-out of
EUR25m.
Source: Company data, HSBC

160

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European Credit Research


Corporate Bond Covenants
September 2010

Brisa
Bond
Coupon

Maturity

Issuer

4.797%

26 Sep 2013 Brisa Finance BV

Guarantor

Out amt

Type

Keep well agreement

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and principal subsidiaries. It also limits the amount of
assets owned by the issuer, the concession holder and principal subsidiaries that can be secured by indebtedness to
20% of consolidated total assets by reference to the most recent published financial statements. Relevant
indebtedness is defined as public debt. Indebtedness covers all borrowed money as well as leases. Principal
subsidiaries are subsidiaries whose gross assets or revenues account for more than 20% of consolidated gross
assets or revenues, respectively.
Put
Put at par plus accrued interests if: (i) the concession is revoked and, as a result, the ratings on the notes or other
rated securities are withdrawn or downgraded to non-IG by Moodys or S&P; or (ii) it becomes unlawful for Brisa BV,
Brisa or the concession holder to comply with the provisions of the keepwell agreement.
Covenants
None
Other
Event of default covers the debt of the issuer, concession holder and principal subsidiaries subject to a carve-out of
EUR25m.
Source: Company data, HSBC

161

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dublin Airport Authority


Bond
Coupon

Maturity

09 Jul 2018
6.5872%
Step up
(See Other

Issuer

Guarantor

Out amt

DAA Finance plc Dublin Airport Authority plc EUR600m

Type
Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Yes, covers relevant indebtedness of the issuer, guarantor and principal subsidiaries and excludes non-recourse
debt. Relevant indebtedness is defined as notes, bonds or other securities which are or which are capable of being,
quoted, listed or dealt in for the time being on any stock exchange or other similar generally recognised market for
securities. Principal subsidiaries are defined as subsidiaries of the guarantor whose gross assets or revenues
account for more than 12.5% of consolidated gross assets or revenues, respectively.
Put
Put at par on a put restructuring event resulting in a rating downgrade to non-investment grade or a rating withdrawal
or a one-notch downgrade if the ratings are already junk during the 90-day restructuring period. Restructuring event
is defined as a change of control event where the government of Ireland ceases, directly or indirectly to own more
than 50% of shares or voting rights.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or principal subsidiary on indebtedness in excess of
EUR50m.Coupon steps up by 125bp in the event of a rating downgrade to below Baa3 by Moodys or to below BBB- by
S&P. Coupon steps down by 125bp in the event of a subsequent rating upgrade by both agencies to at least Baa3/BBB-.
Source: Company data, HSBC

162

abc

European Credit Research


Corporate Bond Covenants
September 2010

Fraport
Bond
Coupon

Maturity

Issuer

Guarantor

5.25%

10 Sep 2019 Fraport AG Frankfurt


None
Airport Services Worldwide

Out amt

Type

EUR800m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers any capital market indebtedness.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

163

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vinci
Bond
Coupon

Maturity

Issuer

5.875%

09 Oct 2016 Cofiroute

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
None
Negative pledge
Yes, but excludes bank debt and limited-recourse borrowings.
Put
None
Covenants
None
Other
None
Source: Company data, HSBC

164

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European Credit Research


Corporate Bond Covenants
September 2010

Vinci
Bond
Coupon

Maturity

Issuer

5.25%

30 Apr 2018 Cofiroute

Guarantor

Out amt

Type

None

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and limited-recourse borrowings.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness (excluding limited-recourse borrowings) in excess
of EUR50m.
Source: Company data, HSBC

165

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vinci
Bond
Coupon

Maturity

Issuer

5%

24 May 2021 Cofiroute

Guarantor

Out amt

Type

None

EUR1100m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and limited-recourse borrowings.
Put
Put at par in case of put event defined as a change of control resulting in a rating downgrade to non-investment
grade or a full rating notch downgrade if the ratings are already junk. CoC does not apply if there is a change of
control at the Vinci level.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness (excluding limited-recourse borrowings) in excess
of EUR50m.
Source: Company data, HSBC

166

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European Credit Research


Corporate Bond Covenants
September 2010

Vinci
Bond
Coupon

Maturity

Issuer

Guarantor

5.625%

04 Jul 2022

Autoroutes du Sud de None


la France ASF

Out amt

Type

EUR1575m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and limited-recourse borrowings.
Put
Put at par on put event defined as a change of control resulting in a rating downgrade to non-investment grade or a
full rating notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness for borrowed money in excess of EUR60m.
Source: Company data, HSBC

167

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European Credit Research


Corporate Bond Covenants
September 2010

Vinci
Bond
Coupon

Maturity

Issuer

7.375%

20 Mar 2019 Autoroutes du Sud de la


France ASF

Guarantor

Out amt

Type

None

EUR970m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt and limited recourse debt. Relevant indebtedness defined for borrowed money,
represented by bonds or notes, which are capable of being traded on any stock exchange or OTC market, and which
does not constitute limited recourse borrowings.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness for borrowed money in excess of EUR60m.
Source: Company data, HSBC

168

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European Credit Research


Corporate Bond Covenants
September 2010

Vinci
Bond
Coupon

Maturity

Issuer

Guarantor

4.125%

13 Apr 2020 Autoroutes du Sud de None


la France ASF

Out amt

Type

EUR500m

Senior unsecured
issued under the
companys EUR6bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers relevant indebtedness defined as bonds or notes which are quoted, admitted to trading or
ordinarily traded in on any stock exchange, OTC market or other securities market and which does not constitute
limited-recourse borrowings.
Put
Put at par in case of change of control (acquisition of more than 50% of shares or voting rights, does not apply to any
relevant persons that are under the control of Vinci SA) resulting in a rating downgrade to non-investment grade or in
a one-notch downgrade if the ratings are already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness for borrowed money in excess of EUR60m.
Source: Company data, HSBC

169

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Corporate Bond Covenants
September 2010

170

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Metals & Mining

171

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglo American
Bond
Coupon

Maturity

Issuer

5.125%

15 Dec 2010 Anglo American


Capital

Guarantor

Out amt

Type

Anglo American plc

GBP300m

Senior unsecured
issued under the
companys USD2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiaries (representing more than 10% of
consolidated revenues or total assets) on indebtedness in excess of USD75m.
Source: Company data, HSBC

172

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European Credit Research


Corporate Bond Covenants
September 2010

Anglo American
Bond
Coupon

Maturity

5.875%

6.875%

Issuer

Guarantor

Out amt

Type

17 Apr 2015 Anglo American


Capital plc

Anglo American plc

EUR1000m

Senior unsecured
issued under the
companys USD6bn
EMTN programme

01 May 2018 Anglo American


Capital plc

Anglo American plc

GBP400m

Senior unsecured
issued under the
companys USD6bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of USD100m.
Source: Company data, HSBC

173

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European Credit Research


Corporate Bond Covenants
September 2010

Anglo American
Bond
Coupon

Maturity

4.25%

4.375%

Issuer

Guarantor

Out amt

Type

30 Sep 2013 Anglo American


Capital plc

Anglo American plc

EUR750m

Senior unsecured
issued under the
companys USD10bn
EMTN programme

02 Dec 2016 Anglo American


Capital plc

Anglo American plc

EUR750m

Senior unsecured
issued under the
companys USD10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on change of control resulting in a rating downgrade to non-investment grade (within the change of control
period) or by one or more notches if the ratings are already non-investment grade. A change of control shall be
deemed to have occurred if an offer is made to all shareholders of the guarantor to acquire all or a majority of the
issued ordinary share capital of the guarantor or if any person proposes a scheme with regard to such acquisition
(other than an exempt newco scheme) and the right to cast more than 50% of the votes has or will become
unconditionally vested in any person.
Covenants
None
Other
Events of default include cross-default of issuer or guarantor on indebtedness in excess of USD100m.
Source: Company data, HSBC

174

abc

European Credit Research


Corporate Bond Covenants
September 2010

ArcelorMittal
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

03 Jun 2013 ArcelorMittal


8.25%
Step up
(See Other)

None

EUR1500m

Senior unsecured

9.375%
03 Jun 2016 ArcelorMittal
Step up
(See Other)

None

EUR1000m

Senior unsecured

Call
Tax call, or callable at par on 3 June 2013 (for 2013 bonds)/3 June 2016 (for 2016 bonds) or at any time following a
change of control event (at 101).
Negative pledge
Yes, but excludes bank debt. Relevant indebtedness covers bonds, notes or other debt instruments of the issuer or
any material subsidiary quoted or listed in on any stock exchange or any other regulated securities market.
Put
Yes, put at par with accrued interest if a restructuring event occurs. Restructuring event is triggered if the issuers
credit rating is downgraded (within 60 days) following a merger, consolidation, amalgamation or reorganisation or if
the credit rating of its material subsidiary is downgraded (within 60 days) following its winding up. Material
subsidiaries are defined as those whose gross assets or pre-tax profits (excluding intra-group items) equal or exceed
5% of the gross assets or pre-tax profits of the Group.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR100m; coupon
steps up by 125bp if rating is downgraded to non-investment grade by at least one agency, steps down if upgraded
back to investment grade by all agencies. The agencies include Fitch, S&P and Moodys.
Source: Company data, HSBC

175

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European Credit Research


Corporate Bond Covenants
September 2010

ArcelorMittal
Bond
Coupon

Maturity

Issuer

4.625%

07 Nov 2014 Arcelor Finance

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in case of restructuring event. A restructuring event is triggered if the issuer or Arcelors credit rating is
downgraded following a merger, consolidation, amalgamation or reorganisation or the winding-up of a material subsidiary.
Covenants
None
Other
Events of default include cross-default of issuer/Arcelor/material subsidiary (representing more than 2% of group
assets or turnover) on indebtedness in excess of EUR50m.
Source: Company data, HSBC

176

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European Credit Research


Corporate Bond Covenants
September 2010

BHP Billiton
Bond
Coupon

Maturity

4.125%

Issuer

Guarantor

Out amt

Type

05 May 2011 BHP Billiton Finance Ltd BHP Billiton Ltd

EUR650m

Senior unsecured
issued under the
companys USD3bn
EMTN programme

4.75%

04 Apr 2012 BHP Billiton Finance Ltd BHP Billiton Ltd

EUR1250m

Senior unsecured

4.375%

26 Feb 2014 BHP Billiton Finance Ltd BHP Billiton Ltd

EUR600m

Senior unsecured
issued under the
companys USD5bn
EMTN programme

6.375%

04 Apr 2016 BHP Billiton Finance Ltd BHP Billiton Ltd

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of any obligor on indebtedness in excess of USD100m.
Source: Company data, HSBC

177

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European Credit Research


Corporate Bond Covenants
September 2010

Glencore
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

23 Apr 2015 Glencore Finance


7.125%
(Europe) SA
Step up
(See Other)

Glencore International
AG, Glencore AG

EUR750m

Senior unsecured
issued under the
companys USD7.5bn
EMTN programme

5.25%
22 Mar 2017 Glencore Finance
Step up
(Europe) SA
(See Other)

Glencore International
AG, Glencore AG

EUR1250m

Senior unsecured
issued under the
companys USD8bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes permitted securitisation transactions.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, guarantors or material subsidiary (representing more than 10% of
consolidated profit before borrowing costs and tax, or more than 10% of consolidated assets) on financial
indebtedness (excluding limited-recourse indebtedness) in excess of USD50m. Xstrata, Century Aluminium and
Minara Resources are not deemed to be material subsidiaries. The coupon steps up by 125bp if the credit ratings
are no longer investment grade with at least two rating agencies (bonds currently only rated by Moodys and S&P).
The coupon steps down by 125bp if at least two investment grade credit ratings are reinstated.
Source: Company data, HSBC

178

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European Credit Research


Corporate Bond Covenants
September 2010

Glencore
Bond
Coupon

Maturity

5.375%

Issuer

Guarantor

Out amt

Type

30 Sep 2011 Glencore Finance


(Europe) SA

Glencore International
AG, Glencore AG

EUR600m

Senior unsecured
issued under the
companys USD1bn
EMTN programme

5.25%

11 Oct 2013 Glencore Finance


(Europe) SA

Glencore International
AG, Glencore AG

EUR850m

Senior unsecured
issued under the
companys USD5bn
EMTN programme

6.5%

27 Feb 2019 Glencore Finance


(Europe) SA

Glencore International
AG, Glencore AG

GBP650m

Senior unsecured
issued under the
companys USD5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantors/material subsidiary (representing more than 10% of
consolidated profit before borrowing costs and tax or consolidated assets) on financial indebtedness (excludes
limited-recourse debt) in excess of USD50m.
Source: Company data, HSBC

179

abc

European Credit Research


Corporate Bond Covenants
September 2010

ThyssenKrupp
Bond
Coupon

Maturity

5%

4.375%

Issuer

Guarantor

Out amt

Type

29 Mar 2011 ThyssenKrupp AG

None

EUR750m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

18 Mar 2015 ThyssenKrupp AG

None

EUR750m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR50m.
Source: Company data, HSBC

180

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European Credit Research


Corporate Bond Covenants
September 2010

ThyssenKrupp
Bond
Coupon

Maturity

6.75%

8.5%

Issuer

Guarantor

Out amt

Type

25 Feb 2013 ThyssenKrupp


ThyssenKrupp AG
Finance Nederland BV

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme.

25 Feb 2016 ThyssenKrupp


ThyssenKrupp AG
Finance Nederland BV

EUR1000m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default cover the cross-default of the issuer/guarantor/material subsidiary on indebtedness in excess of
EUR50m. Material subsidiary is defined as any company in which ThyssenKrupp has an interest, directly or
indirectly, amounting to more than 50% and sales of at least EUR1bn.
Source: Company data, HSBC

181

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European Credit Research


Corporate Bond Covenants
September 2010

ThyssenKrupp
Bond
Coupon

Maturity

Issuer

18 Jun 2014 ThyssenKrupp AG


8%
Step up
(See Other)

Guarantor

Out amt

Type

None

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or withdrawn or a one-notch downgrade if already non-investment grade.
Covenants
None
Other
Events of default cover the cross-default of the issuer/material subsidiary on indebtedness in excess of EUR50m.
Material subsidiary is defined as any company that ThyssenKrupp has an interest, directly or indirectly, amounting to
more than 50% and sales of at least EUR1bn. Coupon steps up by 125bp if ratings are downgraded to noninvestment grade by at least two of the rating agencies (Moodys, S&P or Fitch); steps down if upgraded back to
investment grade by all three agencies.
Source: Company data, HSBC

182

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European Credit Research


Corporate Bond Covenants
September 2010

Vale
Bond
Coupon

Maturity

Issuer

4.375%

24 Mar 2018 Vale SA

Guarantor

Out amt

Type

None

EUR750m

Senior unsecured

Call
Callable at par for taxation reasons. Also callable at the option of the issuer (on at least 30 days but not more than
60 days notice) at make whole + 25bp.
Negative pledge
Yes (limitation on liens), except for permitted liens.
Put
None
Covenants
The documentation includes covenants limiting the ability of the issuer to transfer assets or merge with other entities.
Other
Events of default include cross-default of issuer/significant subsidiary (>10% of total assets) on indebtedness in
excess of USD50m. The documentation includes defeasance language.
Source: Company data, HSBC

183

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European Credit Research


Corporate Bond Covenants
September 2010

Xstrata
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.875%

14 Jun 2012 Xstrata Finance


Canada Ltd

Xstrata plc, Xstrata AG, EUR500m


Xstrata Finance Ltd

Senior unsecured
issued under the
companys USD3bn
EMTN programme

5.25%

13 Jun 2017 Xstrata Finance


Canada Ltd

Xstrata plc, Xstrata AG, EUR500m


Xstrata Finance Ltd

Senior unsecured
issued under the
companys USD3bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary on indebtedness for borrowed money
in excess of USD50m.
Source: Company data, HSBC

184

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Corporate Bond Covenants
September 2010

Xstrata
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.875%

27 May 2011 Xstrata Canada


Financial Corp.

Xstrata plc, Xstrata AG, EUR750m


Xstrata Finance Ltd

Senior unsecured
issued under the
companys USD6bn
EMTN programme

6.25%

27 May 2015 Xstrata Canada


Financial Corp.

Xstrata plc, Xstrata AG, EUR600m


Xstrata Finance Ltd

Senior unsecured
issued under the
companys USD6bn
EMTN programme

7.375%

27 May 2020 Xstrata Canada


Financial Corp.

Xstrata plc, Xstrata AG, GBP500m


Xstrata Finance Ltd

Senior unsecured
issued under the
companys USD6bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt and project finance indebtedness. Relevant indebtedness covers any bond, note,
debenture, or similar instrument that is, or is capable of being, listed, quoted or traded on any stock exchange or in
any securities market and OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights of
Xstrata) resulting in a rating downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if
already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/parent/material subsidiary on indebtedness in excess of USD50m.
Material subsidiary is defined as any subsidiary of Xstrata whose turnover or total assets exceeds 10% of
consolidated turnover or total assets exceeds 10% of consolidated turnover or total assets of Xstrata.
Source: Company data, HSBC

185

European Credit Research


Corporate Bond Covenants
September 2010

186

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Oil & Gas

187

abc

European Credit Research


Corporate Bond Covenants
September 2010

BG
Bond
Coupon

Maturity

5.875%

Issuer

Guarantor

Out amt

Type

13 Nov 2012 BG Energy Capital plc BG Energy Holdings


Limited

GBP250m

Senior unsecured
issued under the
companys USD2bn
EMTN programme

3.375%

15 Jul 2013

BG Energy Capital plc BG Energy Holdings


Limited

EUR750m

Senior unsecured
issued under the
companys USD7.5bn
EMTN programme

5.125%

07 Dec 2017 BG Energy Capital plc BG Energy Holdings


Limited

GBP500m

Senior unsecured
issued under the
companys USD2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiary on indebtedness in excess of
GBP30m.
Source: Company data, HSBC

188

abc

European Credit Research


Corporate Bond Covenants
September 2010

BG
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

3.625%

16 Jul 2019

BG Energy Capital plc BG Energy Holdings Ltd EUR500m

Type
Senior unsecured
issued under the
companys USD7.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, defined as any bonds, notes, debentures, loan stock
or other quoted/listed securities.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer, guarantor or a material subsidiary (>15% of group net assets)
on indebtedness in excess of USD100m.
Source: Company data, HSBC

189

abc

European Credit Research


Corporate Bond Covenants
September 2010

BP
Bond
Coupon

Maturity

5.75%

Issuer

Guarantor

Out amt

Type

08 Nov 2010 BP Capital Markets plc

BP Plc

GBP700m

Senior unsecured
issued under the
companys USD15bn
debt issuance
programme

4.25%

10 Jan 2011 BP Capital Markets plc

BP Plc

EUR750m

Senior unsecured
issued under the
companys USD20bn
debt issuance
programme

4.5%

08 Nov 2012 BP Capital Markets plc

BP Plc

EUR1000m

Senior unsecured
issued under the
companys USD15bn
debt issuance
programme

4%

29 Dec 2014 BP Capital Markets plc

BP Plc

GBP500m

Senior unsecured
under the companys
USD20bn EMTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

190

abc

European Credit Research


Corporate Bond Covenants
September 2010

Eni
Bond
Coupon

Maturity

4%
1.881%

Issuer

Guarantor

Out amt

Type

29 Jun 2015 ENI S.p.A.

None

EUR1000m

Senior unsecured
(retail issue)

29 Jun 2015 ENI S.p.A.

None

EUR1000m

Senior unsecured
(retail issue)

Call
None
Negative pledge
None
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

191

abc

European Credit Research


Corporate Bond Covenants
September 2010

Eni
Bond
Coupon

Maturity

4.875%

Issuer

Guarantor

Out amt

Type

09 Dec 2010 Eni Coordination


Center S.A

Eni S.p.A.

GBP200m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

4.625%

30 Apr 2013 Eni S.p.A.

None

EUR1500m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

5.875%

20 Jan 2014 Eni S.p.A

None

EUR1250m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

5%

28 Jan 2016 Eni S.p.A

None

EUR1500m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

4.75%

14 Nov 2017 Eni S.p.A

None

EUR1250m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of ENI on indebtedness in excess of 3% of the groups consolidated total
shareholders equity.
Source: Company data, HSBC

192

abc

European Credit Research


Corporate Bond Covenants
September 2010

Eni
Bond
Coupon

Maturity

6.125%

Issuer

Guarantor

Out amt

Type

17 Dec 2018 Eni Co-ordination


Center S.A

Eni S.p.A

GBP150m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

5%

27 Jan 2019 Eni Coordination


Center S.A

Eni S.p.A.

GBP200m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

4.125%

16 Sep 2019 ENI SpA

None

EUR1500m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme

4%

29 Jun 2020 ENI SpA

None

EUR1000m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of ENI on indebtedness in excess of 3% of the groups consolidated total
shareholders equity.
Source: Company data, HSBC

193

abc

European Credit Research


Corporate Bond Covenants
September 2010

MOL
Bond
Coupon

Maturity

Issuer

Guarantor

5.875%

20 Apr 2017 MOL Hungarian Oil and Gas None


Public Limited Company

Out amt

Type

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons. Also 15% clean-up call at par if put option is exercised.
Negative pledge
Yes. Relevant indebtedness is defined as any debt securities, with a maturity of more than one year, with more than
50% in aggregate amount initially offered outside Hungary, listed/traded on any stock exchange, OTC or other
organised securities market (whether or not initially distributed by way of private placing).
Put
Put at par on change of control (with control defined as the power to direct the management and policies of an entity,
whether through the ownership of voting capital, by contract or otherwise).
Covenants
None
Other
Events of default include cross-default of issuer or material subsidiary (EBITDA or tangible net worth > 10% of
group) on indebtedness in excess of EUR50m.
Source: Company data, HSBC

194

abc

European Credit Research


Corporate Bond Covenants
September 2010

OMV
Bond
Coupon

Maturity

6.25%

4.375%

Issuer

Guarantor

Out amt

Type

07 Apr 2014 OMV AG

None

EUR1000m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

10 Feb 2020 OMV AG

None

EUR500m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes. Relevant indebtedness covers bonds, notes, debentures, loan stock or other securities (capable of being) listed,
quoted or traded on any stock exchange, or OTC or other securities market.
Put
Put at par on change of control (defined as the right to give directions to management and take decisions on matters
of principle, whether by way of voting rights, rights arising out of the respective articles of association and/or
shareholders agreements, contract or general law or for any other reason) resulting in a rating downgrade to noninvestment grade or the withdrawal of the rating or a one-notch downgrade if already non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary on indebtedness in excess of EUR25m. Material
subsidiary is defined as any subsidiary whose net income or total assets represent in excess of 10% of the
consolidated net income or total assets of the issuer and its subsidiaries.
Source: Company data, HSBC

195

abc

European Credit Research


Corporate Bond Covenants
September 2010

Repsol
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5%

22 Jul 2013

Repsol International
Finance B.V.

Repsol YPF S.A.

EUR1000m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

4.625%

08 Oct 2014 Repsol International


Finance B.V.

Repsol YPF S.A.

EUR1000m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiary (10% of the total assets or net profit before
tax and extraordinary items of the group) on indebtedness in excess of USD20m. Principal subsidiaries are defined as
subsidiaries incorporated in an OECD member country rated A or higher on the day the event of default occurs.
Source: Company data, HSBC

196

abc

European Credit Research


Corporate Bond Covenants
September 2010

Repsol
Bond
Coupon

Maturity

Issuer

4.75%

16 Feb 2017 Repsol International


Finance B.V.

Guarantor

Out amt

Type

Repsol YPF S.A.

EUR886m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and the guarantor defined as bonds, debentures, notes
and other securities listed or traded over the counter. The definition excludes debt of an initial maturity of less than
one year.
Put
None
Covenants
None
Other
Event of default covers the default of the issuer and the guarantor subject to a carve-out of USD50m.
Source: Company data, HSBC

197

abc

European Credit Research


Corporate Bond Covenants
September 2010

Repsol
Bond
Coupon

Maturity

Issuer

6.5%

27 Mar 2014 Repsol International


Finance B.V.

Guarantor

Out amt

Type

Repsol YPF S.A.

EUR1000m

Senior unsecured
issued under the
companys EUR10bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
Put at par on a put restructuring event (defined as acquiring more than 50% of share capital or voting rights) resulting in
a rating downgrade to non-investment grade or a rating withdrawal or a one-notch downgrade if already non-investment
grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on indebtedness in excess of the higher of 0.25% of total
shareholders equity and USD50m.
Source: Company data, HSBC

198

abc

European Credit Research


Corporate Bond Covenants
September 2010

Schlumberger
Bond
Coupon

Maturity

5.25%
4.5%

Issuer

Guarantor

Out amt

Type

05 Sep 2013 Schlumberger Finance Schlumberger Limited


B.V.

EUR500m

Senior unsecured

25 Mar 2014 Schlumberger Finance Schlumberger Limited


B.V.

EUR1000m

Senior unsecured
issued under the
companys EUR3bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant debt covers any bond, note, debenture, or similar instrument that is, or is capable
of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/principal subsidiaries on indebtedness in excess of
EUR50m. Principal subsidiary is defined as any subsidiary whose revenues or total assets represent 10% or more of
the consolidated revenues or total assets of the group.
Source: Company data, HSBC

199

abc

European Credit Research


Corporate Bond Covenants
September 2010

Shell
Bond
Coupon

Maturity

3.375%

Issuer

Guarantor

Out amt

Type

09 Feb 2012 Shell International


Finance B.V.

Royal Dutch Shell plc

EUR1750m

Senior unsecured
issued under the
companys USD15bn
EMTN programme.

3%

14 May 2013 Shell International


Finance B.V.

Royal Dutch Shell plc

EUR2500m

Senior unsecured
issued under the
companys USD15bn
EMTN programme.

4.5%

09 Feb 2016 Shell International


Finance B.V.

Royal Dutch Shell plc

EUR1250m

Senior unsecured
issued under the
companys USD15bn
EMTN programme.

4.625%

22 May 2017 Shell International


Finance BV

Royal Dutch Shell Plc

EUR1500m

Senior unsecured

4.375%

14 May 2018 Shell International


Finance B.V.

Royal Dutch Shell plc

EUR2500m

Senior unsecured
issued under the
companys USD15bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default cover the default of the issuer and the guarantor.
Source: Company data, HSBC

200

abc

European Credit Research


Corporate Bond Covenants
September 2010

StatoilHydro
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

11 Mar 2015 StatoilHydro ASA

StatoilHydro Petroleum
AS

EUR1300m

Senior unsecured
issued under the
companys USD6bn
EMTN programme.

5.625%

11 Mar 2021 StatoilHydro ASA

StatoilHydro Petroleum
AS

EUR1200m

Senior unsecured
issued under the
companys USD6bn
EMTN programme.

6.875%

11 Mar 2031 StatoilHydro ASA

StatoilHydro Petroleum
AS

GBP800m

Senior unsecured
issued under the
companys USD6bn
EMTN programme.

Call
Yes, at the make-whole redemption amount greater of par and 25bp + DBR 3.75% due 2015 (for 2015 bond), DBR
3.75% due 2019 (for 2021 bond), UKT 4.25% due 2032 (for 2031 bond). Also callable for taxation reasons.
Negative pledge
Yes, excludes bank debt. Relevant indebtedness covers any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
None
Covenants
None
Other
Events of default cover the cross-default of the issuer/guarantor on indebtedness in excess of USD50m.
Source: Company data, HSBC

201

abc

European Credit Research


Corporate Bond Covenants
September 2010

Talisman
Bond
Coupon

Maturity

Issuer

Guarantor

6.625%

05 Dec 2017 Talisman Energy Inc None

Out amt

Type

GBP250m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt (amongst other exclusions).
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary (greater of 5%+ consolidated assets and
CAD75m) on indebtedness in excess of the higher of CAD75m or 2% of equity of the issuer.
Source: Company data, HSBC

202

abc

European Credit Research


Corporate Bond Covenants
September 2010

Technip
Bond
Coupon

Maturity

Issuer

4.625%

26 May 2011 Technip

Guarantor

Out amt

Type

None

EUR650m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/material subsidiary (Technip Eurocash S.N.C.) on indebtedness in
excess of EUR50m.
Source: Company data, HSBC

203

abc

European Credit Research


Corporate Bond Covenants
September 2010

Total
Bond
Coupon

Maturity

4.875%

Issuer

Guarantor

Out amt

Type

23 Dec 2010 Total Capital S.A.

Total S.A.

GBP700m

Senior unsecured
issued under the
companys EUR8bn
EMTN programme

3.875%

06 Sep 2011 Total Capital S.A.

Total S.A.

EUR1400m

Senior unsecured

3.25%

26 Jan 2012 Total Capital S.A.

Total S.A.

EUR650m

Senior unsecured
issued under the
companys EUR8bn
EMTN programme

4.625%

07 Mar 2012 Total Capital S.A.

Total S.A.

GBP450m

Senior unsecured
issued under the
companys EUR9bn
EMTN programme

5.5%

29 Jan 2013 Total Capital S.A.

Total S.A.

GBP350m

Senior unsecured

4.75%

10 Dec 2013 Total Capital S.A.

Total S.A.

EUR1000m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on relevant indebtedness in excess of USD50m.
Source: Company data, HSBC

204

abc

European Credit Research


Corporate Bond Covenants
September 2010

Total
Bond
Coupon

Maturity

3.5%

Issuer

Guarantor

Out amt

Type

27 Feb 2014 Total Capital S.A.

Total S.A.

EUR1150m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

3.625%

19 May 2015 Total Capital S.A.

Total S.A.

EUR550m

As above

4.25%

08 Dec 2017 Total Capital S.A.

Total S.A.

GBP300m

As above

4.875%

28 Jan 2019 Total Capital S.A.

Total S.A.

EUR1200m

As above

3.125%

16 Sep 2022 Total Capital S.A.

Total S.A.

EUR500m

Senior unsecured
issued under the
companys EUR18bn
EMTN programme.

5.125%

26 Mar 2024 Total Capital S.A.

Total S.A.

EUR950m

Senior unsecured
issued under the
companys EUR15bn
EMTN programme.

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/guarantor on relevant indebtedness in excess of USD50m.
Source: Company data, HSBC

205

European Credit Research


Corporate Bond Covenants
September 2010

206

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Paper

207

abc

European Credit Research


Corporate Bond Covenants
September 2010

Stora Enso
Bond
Coupon

Maturity

Issuer

5.125%

23 Jun 2014 Stora Enso Oyj

Guarantor

Out amt

Type

None

EUR750m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary (representing more than 10% of consolidated net
sales or total net assets) on indebtedness in excess of EUR20m.
Source: Company data, HSBC

208

abc

European Credit Research


Corporate Bond Covenants
September 2010

Svenska Cellulosa (SCA)


Bond
Coupon

Maturity

Issuer

3.875%

07 Mar 2011 SCA Finans AB

Guarantor

Out amt

Type

Svenska Cellulosa
Aktiebolaget SCA

EUR700m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes but excludes bank debt/project finance debt.
Put
Yes, put at par in case of a change of control resulting in a rating downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of issuer/guarantor/material subsidiaries (representing more than 10% of
consolidated turnover or total assets) on indebtedness in excess of 0.5% of consolidated shareholders equity.
Source: Company data, HSBC

209

abc

European Credit Research


Corporate Bond Covenants
September 2010

UPM
Bond
Coupon

Maturity

6.125%

6.625%

Issuer

Guarantor

Out amt

Type

23 Jan 2012 UPM-Kymmene Corp None

EUR600m

Senior unsecured
issued under the
companys EUR2bn
Global MTN
programme

23 Jan 2017 UPM-Kymmene Corp None

GBP250m

Senior unsecured
issued under the
companys EUR2bn
Global MTN
programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/subsidiary on indebtedness in excess of EUR20m.
Source: Company data, HSBC

210

European Credit Research


Corporate Bond Covenants
September 2010

abc

Property

211

abc

European Credit Research


Corporate Bond Covenants
September 2010

Gecina
Bond
Coupon

Maturity

Issuer

4.875%

25 Jan 2012 Gecina

Guarantor

Out amt

Type

None

EUR495m

Senior unsecured
issued under the
companys EUR1.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, put at par in case of change of control and downgrade to non-investment grade.
Covenants
Limitation on secured borrowings (unsecured revalued assets value to exceed unsecured bond indebtedness at any
time).
Other
Events of default include cross-default of issuer/material subsidiaries (representing more than 5% of total revalued
net assets) on indebtedness in excess of EUR10m.
Source: Company data, HSBC

212

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European Credit Research


Corporate Bond Covenants
September 2010

Hammerson
Bond
Coupon

Maturity

Issuer

4.875%

19 Jun 2015 Hammerson plc

Guarantor

Out amt

Type

None

EUR700m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
See covenants for limit on secured borrowings.
Put
Yes, put at par in case of change of control and downgrade to non-investment grade or at least one-notch
downgrade if the ratings are already non-investment grade.
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 1.75x adjusted capital and reserves,
secured borrowings not to exceed 50% of adj. capital and reserves minus adjustments).
Other
Events of default include cross-default of issuer/material subsidiary (representing more than 10% of group interests
in land and buildings, more than 10% of group net rental income, more than 10% of consolidated PBT or net assets)
on indebtedness in excess of 1% of adjusted capital and reserves.
Source: Company data, HSBC

213

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European Credit Research


Corporate Bond Covenants
September 2010

Hammerson
Bond
Coupon

Maturity

5.25%

Issuer

Guarantor

Out amt

Type

15 Dec 2016 Hammerson plc

None

GBP300m

Senior unsecured

6.875%

31 Mar 2020 Hammerson plc

None

GBP250m

Senior unsecured

6%

23 Feb 2026 Hammerson plc

None

GBP300m

Senior unsecured

Call
Callable at higher of par or UKT 4.75% due 2016 (for 2016 bonds), UKT 8% due 2021 (for 2020 bonds), UKT 6%
2028 (for 2026 bonds). Also standard UK tax call.
Negative pledge
See covenants for limit on secured borrowings.
Put
Yes, put at par in case of change of control and downgrade to non-investment grade or at least one-notch
downgrade if the ratings are already non-investment grade.
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 1.75x adjusted capital and reserves,
secured borrowings not to exceed 50% of adj. capital and reserves minus adjustments).
Other
Events of default include cross-default of issuer/material subsidiary (representing more than 10% of group interests
in land and buildings, more than 10% of group net rental income, more than 10% of consolidated PBT or net assets)
on indebtedness in excess of 1% of adjusted capital and reserves.
Source: Company data, HSBC

214

abc

European Credit Research


Corporate Bond Covenants
September 2010

Hammerson
Bond
Coupon

Maturity

Issuer

7.25%

21 Apr 2028 Hammerson plc

Guarantor

Out amt

Type

None

GBP200m

Senior unsecured

Call
Callable at higher of Par or UKT 8% 2021 + standard UK tax call.
Negative pledge
See covenants for limit on secured borrowings.
Put
None
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 150% of adj. capital and reserves,
secured borrowings not to exceed 50% of adj. capital and reserves).
Other
Events of default include cross-default of issuer/material subsidiary (representing more than 10% of group interests
in land and buildings, more than 10% of group net rental income, more than 10% of consolidated PBT or net assets)
on indebtedness in excess of 1% of adjusted capital and reserves.
Source: Company data, HSBC

215

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European Credit Research


Corporate Bond Covenants
September 2010

Klpierre
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.625%

15 Jul 2011

Klpierre

None

EUR600m

Senior unsecured

4.25%

16 Mar 2016 Klpierre

None

EUR689m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, put at par in the event of a change of control and downgrade to non-investment grade.
Covenants
Limitation on secured borrowings (secured borrowings not to exceed 0.5x the revalued net assets other adjustments).
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR10m.
Source: Company data, HSBC

216

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Corporate Bond Covenants
September 2010

Klpierre
Bond
Coupon

Maturity

Issuer

4%

13 Apr 2017 Klpierre SA

Guarantor

Out amt

Type

None

EUR700m

Senior unsecured
issued under the
companys EUR5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt which excludes bank debt.
Put
Put at par on restructuring event resulting in a downgrade to non-investment grade. A restructuring event is defined
as any person or group (other than BNP Paribas and its group) owning directly or indirectly one-third of the
aggregate voting power.
Covenants
Limitation on secured borrowings (secured borrowings not to exceed 0.5x the revalued net assets other adjustments).
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR35m.
Source: Company data, HSBC

217

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Corporate Bond Covenants
September 2010

SEGRO
Bond
Coupon

Maturity

5.5%

Issuer

Guarantor

Out amt

Type

20 Jun 2018 Slough Estates plc

None

GBP200m

Senior unsecured

5.625%

07 Dec 2020 Slough Estates plc

None

GBP250m

Senior unsecured

6.75%

23 Nov 2021 SEGRO plc (formerly None


Slough Estates plc)

GBP300m

Senior unsecured

5.75%

20 Jun 2035 Slough Estates plc

GBP200m

Senior unsecured

None

Call
Callable at the higher of par and the relevant European Investment Bank (EIB) redemption rate. Also callable for
taxation reasons.
Negative pledge
See covenants for limit on secured borrowings.
Put
Put at par if a restructuring event is deemed to occur and a related rating downgrade to non-investment grade (or a
one-notch downgrade if ratings are already non-investment grade) or negative rating event occurs. A restructuring
event is defined as any person (other than a holding company with shareholders similar to the pre-existing
shareholders of the issuer) becoming interested in more than 50% of the issuers share capital or voting rights.
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 175% of the adjusted capital and
reserves, secured borrowings not to exceed 50% of the adjusted capital and reserves).
Other
Events of default include cross-default of the issuer or its principal subsidiaries (representing more than 5% of the book
value of consolidated tangible assets) on any loan or other indebtedness for borrowed money exceeding GBP5m.
Source: Company data, HSBC

218

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Corporate Bond Covenants
September 2010

SEGRO
Bond
Coupon

Maturity

7%
6.75%

Issuer

Guarantor

Out amt

Type

14 Mar 2022 Slough Estates plc

None

GBP150m

Senior unsecured

23 Feb 2024 Slough Estates plc

None

GBP225m

Senior unsecured

Call
Callable at higher of par or UKT 8% 2021 + standard UK tax call.
Negative pledge
See covenants for limit on secured borrowings.
Put
Put at par in the case of a change of control (CoC) and a rating downgrade to non-investment grade or at least onenotch downgrade if ratings are already non-investment grade within 180 days of the CoC.
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 175% of the adjusted capital and
reserves, secured borrowings not to exceed 50% of the adjusted capital and reserves) + restrictions on disposals of
assets (gross value of assets disposed of not to exceed 30% of gross value of group assets) + restrictions on
dividend payment/asset distribution to new owner.
Other
Events of default include cross-default of issuer/principal subsidiary (representing more than 5% of the book value of
consolidated tangible assets) on indebtedness in excess of GBP5m.
Source: Company data, HSBC

219

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Corporate Bond Covenants
September 2010

SEGRO
Bond
Coupon

Maturity

Issuer

6.25%

30 Sep 2015 Slough Estates plc

Guarantor

Out amt

Type

None

GBP150m

Senior unsecured

Call
Callable at higher of par or UKT 8% 2015 + standard UK tax call.
Negative pledge
See covenants for limit on secured borrowings.
Put
None
Covenants
Limitation on secured and unsecured borrowings (net borrowings not to exceed 175% of the adjusted capital and
reserves, secured borrowings not to exceed 50% of the adjusted capital and reserves) + restrictions on disposals of
assets (gross value of assets disposed of not to exceed 30% of gross value of group assets) + restrictions on
dividend payment/asset distribution to new owner.
Other
Events of default include cross-default of issuer/principal subsidiary (representing more than 5% of the book value of
consolidated tangible assets) on indebtedness in excess of GBP5m.
Source: Company data, HSBC

220

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Corporate Bond Covenants
September 2010

Unibail Rodamco
Bond
Coupon

Maturity

Issuer

4%

29 Oct 2011 Unibail

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured
issued under the
companys EUR3.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in the event of a hostile change of control or in the event of a friendly change of control resulting in more
than a two-notch downgrade.
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiaries (representing more than 5% of Unibails total
value) on indebtedness in excess of EUR15m.
Source: Company data, HSBC

221

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Corporate Bond Covenants
September 2010

Unibail Rodamco
Bond
Coupon

Maturity

4.125%

Issuer

Guarantor

Out amt

Type

21 Apr 2011 Rodamco Sverige AB Rodamco Europe NV

EUR500m

Senior unsecured
issued under the
companys EUR2.5bn
EMTN programme

3.75%

12 Dec 2012 Rodamco Europe


Finance BV

Rodamco Europe NV

EUR500m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

4.375%

01 Oct 2014 Rodamco Europe


Finance BV

Rodamco Europe NV

EUR500m

Senior unsecured
issued under the
companys EUR2bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in the case of a change of control (CoC) and a rating downgrade to non-investment grade or at least onenotch downgrade if ratings are already non-investment grade within 180 days of the CoC.
Covenants
Limitation on subsidiary borrowings (not to exceed 30% of total group assets)
Other
Events of default include cross-default of issuer/guarantor/principal subsidiaries (representing more than 10% of
consolidated tangible fixed assets or gross rental income) on indebtedness in excess of EUR40m.
Source: Company data, HSBC

222

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Corporate Bond Covenants
September 2010

Unibail Rodamco
Bond
Coupon

Maturity

3.375%

4.625%

Issuer

Guarantor

Out amt

Type

11 Mar 2015 Unibail-Rodamco SE None

EUR635m

Senior unsecured
issued under the
companys EUR5.5bn
EMTN programme

23 Sep 2016 Unibail-Rodamco SE None

EUR500m

Senior unsecured
issued under the
companys EUR5.5bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer/principal subsidiary (whose value represents not less than 5% of the
independently appraised total revalued value of the group) on indebtedness exceeding EUR15m.
Source: Company data, HSBC

223

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Corporate Bond Covenants
September 2010

224

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Corporate Bond Covenants
September 2010

abc

Transport

225

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Corporate Bond Covenants
September 2010

Air France KLM


Bond
Coupon

Maturity

Issuer

4.75%

22 Jan 2014 Socit Air France

Guarantor

Out amt

Type

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Yes, put at par in case of change of control of Air France (if AF-KLM ceases to hold less than two-thirds of AFs
capital and voting rights) and of AF-KLM (if this results in a rating downgrade to non-investment grade, or if the
ratings remain unchanged).
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR125m.
Source: Company data, HSBC

226

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Corporate Bond Covenants
September 2010

Air France KLM


Bond
Coupon

Maturity

Issuer

6.75%

27 Oct 2016 Air France-KLM SA

Guarantor

Out amt

Socit Air France and EUR700m


KLM each to the extent
of 50% of any amounts
due by AF-KLM

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par in the event of a change of control of the issuer or in the event that a third party comes to hold: (i) more
than 50% of the share capital of Socit Air France and/or the economic rights relating to shares in the capital of
KLM; or (ii) more than 50% of the voting rights relating to shares in the capital of Socit Air France and/or KLM.
Covenants
None
Other
Events of default include cross-default of issuer or guarantor on indebtedness in excess of EUR125m.
Source: Company data, HSBC

227

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Corporate Bond Covenants
September 2010

Deutsche Lufthansa
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

06 May 2013 Deutsche Lufthansa AG

None

EUR500m

Senior unsecured

6.75%

24 Mar 2014 Deutsche Lufthansa AG

None

EUR850m

Senior unsecured
issued under the
companys EUR4BN
EMTN programme

6.5%

07 Jul 2016

None

EUR750m

Senior unsecured
issued under the
companys EUR4bn
EMTN programme

Deutsche Lufthansa AG

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but only covers capital market indebtedness other than permitted indebtedness. Capital market indebtedness is
defined as any present or future bonds, notes, or any other similar securities that are or intended to be quoted, listed
or traded on any stock exchange or OTC market. Permitted indebtedness means any capital market indebtedness
which is directly or indirectly secured by aircraft or aircraft equipment of the issuer or any of the issuers subsidiaries.
Put
Put at par in case of change of control (acquisition of >50% of the ordinary shares) resulting in a rating downgrade to
non-investment grade (or all rating agencies ceasing to assign a credit rating to Lufthansa) within the change of
control period (90 days after the announcement of the change of control).
Covenants
None
Other
Events of default include cross-default of issuer on indebtedness in excess of EUR125m.
Source: Company data, HSBC

228

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Corporate Bond Covenants
September 2010

FirstGroup
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

15 Apr 2013 FirstGroup plc


6.875%
Step up
(See Other)

None

GBP300m

Senior unsecured

6.125%
18 Jan 2019 FirstGroup plc
Step up
(See Other)

None

GBP250m

Senior unsecured

Call
Spens call ref UKT5% 2012 (for 2013 bonds) / UKT8% 2021 (for 2019 bonds).
Negative pledge
Negative pledge covers the indebtedness of the issuer and material subsidiaries. Indebtedness is defined as notes,
bonds, debenture stock, loan stock or other securities as well as borrowed money or any liability in respect of any
acceptance, leasing or hire purchase agreement. The clause excludes permitted security interests defined mainly as
security granted over GBP25m of debt or less as well as security on material subsidiaries purchased after 20 March
2002. Material subsidiaries are defined as subsidiaries accounting for more than 10% of consolidated turnover by
reference to the most recent annual audited accounts. Excluded from this definition are subsidiaries that are singlepurpose entities with assets constituted by one or more projects and designated as excluded subsidiaries by the issuer.
Put
None
Covenants
None
Other
Event of default covers the debt of the issuer and material subsidiaries subject to a GBP25m carve-out. Material
subsidiaries are defined as subsidiaries accounting for more than 10% of consolidated turnover by reference to the
most recent annual audited accounts. Excluded from this definition are subsidiaries that are single-purpose entities
with assets constituted by one or more projects and designated as excluded subsidiaries by the issuer. It is an event
of default if the issuer ceases or threatens to cease the whole or substantially the whole of its business save with the
written consent of the trustee. The coupon steps up/down by 150bp if: (i) any person or group of persons acting in
concert becomes interested in more than 50% of the issuers capital or voting rights; or (ii) the group sells
subsidiaries accounting for more than 30% of consolidated turnover over a period of 12 months; or (iii) the group
acquires subsidiaries accounting for more than 30% of consolidated turnover over a period of 12 months by
reference to the groups most recent annual audited accounts, and Moodys or S&P downgrade/upgrade the bonds
from investment grade to non-investment grade within 90 days specifically as a result of (i), (ii) or (iii).
Source: Company data, HSBC

229

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Corporate Bond Covenants
September 2010

FirstGroup
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

19 Sep 2018 FirstGroup plc First Student, Inc., Laidlaw


GBP300m
8.125%
Step up
Transit, Inc., First Transit, Inc.,
(See Other)
Greyhound Lines, Inc. and First
West Yorkshire Limited

Senior unsecured

8.75%
08 Apr 2021 FirstGroup plc As above
Step up
(See Other)

GBP350m

Senior unsecured

18 Sep 2024 FirstGroup plc First Student, Inc., First


GBP200m
6.875%
Step up
Transit, Inc., Greyhound Lines,
(See Other)
Inc. and First West Yorkshire
Limited

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, covers indebtedness of the issuer, guarantor or material subsidiary. Indebtedness covers any bond, note,
debenture, loan stock, or other securities or any borrowed money or any liability under or in respect of any acceptance
or acceptance credit or any leasing or hire purchase agreement which is in the nature of borrowed money (unless the
principal amount of that indebtedness is GBP25m on or before 15 April 2013 or GBP50m thereafter). Material
subsidiary is defined as any company with excess of 10% of consolidated gross revenues and assets excluding those
which are a single-purpose company whose principal assets are constituted by one or more projects or contracts.
Put
Put at par on a put restructuring event resulting in a rating downgrade to non-investment grade or a rating withdrawal
or a one-notch downgrade if the ratings are already junk during the 90-day restructuring period. A restructuring event
refers to a change of control whereby the relevant person is/are or become/s interested in excess of 50% of issued
share capital of the issuer or holding company or carries more than 50% of voting rights.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or any material subsidiary on indebtedness in excess of
GBP25m. Material subsidiary is defined as any company with excess of 10% of consolidated gross revenues and assets
excluding those which are a single-purpose company whose principal assets are constituted by one or more projects or
contracts. The coupon steps up by 125bp if the rating is downgraded to non-investment grade or withdrawn by at least two
rating agencies; it steps down if the rating is upgraded back to investment grade by both agencies.
Source: Company data, HSBC

230

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Corporate Bond Covenants
September 2010

Go-Ahead
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

29 Sep 2017 Go-Ahead Group plc Go-Ahead Holding Ltd, GBP200m


5.375%
Step up
Go-Ahead Leasing Ltd,
(See Other)
Go North East Ltd,
London General
Transport Services Ltd,
Metrobus Ltd, Go South
Coast Ltd, Brighton &
Hove Bus and Coach
Company Ltd, City of
Oxford Motor Services Ltd

Type
Senior unsecured

Call
Callable at the higher of par and UKT 4% 2016 + 50bps. Also callable for taxation reasons.
Negative pledge
Yes. Relevant indebtedness covers bonds, notes, debentures, loan stock or other securities listed/traded on any
stock exchange or other securities market.
Put
Put at par on change of control and related downgrade to non-investment grade (or the bonds are unrated or do not
have an investment-grade rating from at least one agency) within 180 days.
Covenants
None
Other
Events of default include cross-default of issuer/guarantors/material subsidiary (representing more than 10% of
consolidated turnover) on indebtedness in excess of GBP25m. Coupon steps up by 125bp if the minimum rating
requirement (investment-grade ratings with at least two rating agencies among Moodys, S&P and Fitch) is not met.
Source: Company data, HSBC

231

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Corporate Bond Covenants
September 2010

National Express
Bond
Coupon

Maturity

Issuer

13 Jan 2017 National Express


6.25%
Step up
Group plc
(See Other)

Guarantor

Out amt

Type

National Express
Corporation, Durham
School Services, L.P.
and West Midlands
Travel Limited

GBP350m

Senior unsecured
issued under the
companys GBP1bn
EMTN programme

Call
Callable at the higher of par and UKT 4% 2016 + 20bp. Also callable for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on change of control, defined as any person (other than a holding company with shareholders similar to
the pre-existing shareholders of the issuer) becoming interested in more than 50% of the issuers share capital or
voting rights.
Covenants
None
Other
Events of default include cross-default of the issuer or its material subsidiaries (gross assets or pre-tax profits of at
least 10% of the groups total) on any indebtedness for borrowed money exceeding GBP25m. Coupon steps up by
125bp if any (solicited) credit rating out of a minimum of two falls to non-investment grade. Coupon steps down to the
initial interest rate if the issuer regains at least two (solicited) investment-grade ratings.
Source: Company data, HSBC

232

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Corporate Bond Covenants
September 2010

National Express
Bond
Coupon

Maturity

Issuer

17 Jun 2020 National Express


6.625%
Step up
Group plc
(See Other)

Guarantor

Out amt

Type

National Express
Corporation, Durham
School Services, L.P.
and West Midlands
Travel Limited

GBP225m

Senior unsecured
issued under the
companys GBP1bn
EMTN programme

Call
Non-callable except for taxation reasons.
Negative pledge
Yes, but excludes bank debt.
Put
Put at par on change of control, defined as any person (other than a holding company with shareholders similar to
the pre-existing shareholders of the issuer) becoming interested in more than 50% of the issuers share capital or
voting rights.
Covenants
None
Other
Events of default include cross-default of the issuer or its material subsidiaries (gross assets or pre-tax profits of at
least 10% of the groups total) on any indebtedness for borrowed money exceeding GBP25m. Coupon steps up by
125bp if any (solicited) credit rating out of a minimum of two falls to non-investment grade. Coupon steps down to the
initial interest rate if the issuer regains at least two (solicited) investment grade ratings.
Source: Company data, HSBC

233

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Corporate Bond Covenants
September 2010

Stagecoach
Bond
Coupon

Maturity

Issuer

Guarantor

16 Dec 2016 Stagecoach Group plc Stagecoach Transport


5.75%
Step up
Holdings plc
(See Other)

Out amt

Type

GBP400m

Senior unsecured

Call
Callable at par for taxation reasons. Also callable at the option of the issuer (with no less than 30 and no more than
60 days notice) at the higher of par or G+50bp.
Negative pledge
Negative pledge covers any relevant indebtedness, defined as any indebtedness for borrowed money in the form of
bonds, notes, debentures, loan stock or other securities which are quoted, listed or dealt in or traded on any stock
exchange or OTC market. Excludes any permitted security interest.
Put
Put at par on a put event defined as a change of control (interest in more than 50% of the capital or voting rights)
resulting in a downgrade to non-investment grade.
Covenants
None
Other
Events of default include cross-default of the issuer, guarantor or its material subsidiaries on indebtedness of at least
GBP25m. The coupon steps up by 125bp in the event that the bonds are not rated at least BBB- or Baa3 by at least
two rating agencies. Coupon steps down if at least two ratings are back to investment grade. Only one interest rate
adjustment downwards and one interest rate adjustment upwards will be permitted.
Source: Company data, HSBC

234

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Corporate Bond Covenants
September 2010

abc

Consumer, Retail &


Tobacco

235

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Corporate Bond Covenants
September 2010

236

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Corporate Bond Covenants
September 2010

abc

Food and Beverages

237

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Corporate Bond Covenants
September 2010

Anheuser-Busch InBev
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

30 Jan 2013 Anheuser-Busch


7.375%
InBev SA/NV
Step up
(see other)

Multiple subsidiaries

EUR750m

Senior unsecured

6.57%
27 Feb 2014 Anheuser-Busch
InBev SA/NV
Step up
(see Other)

Multiple subsidiaries

EUR750m

Senior unsecured

8.625%
30 Jan 2017 Anheuser-Busch
InBev SA/NV
Step up
(see Other)

Multiple subsidiaries

EUR600m

Senior unsecured

Call
Tax call and make whole at German Bund (similar maturity to the remaining term of the notes) + 80bp (except for
Jan 2017 bond, at 85bp)
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantors and its significant subsidiaries. Relevant
indebtedness is defined as bonds, notes, other listed debt or debt traded over the counter. Significant subsidiaries are
deemed any subsidiary which constitutes 10% or more of the issuers consolidated revenue, consolidated EBITDA or
consolidated gross assets, respectively, as reflected in the issuers most recent annual audited financial statements.
Put
A put at 101% of the par after a put event. A put event occurs when there is a change of control (defined as 50% of
share capital or voting rights, indirectly or directly, or the power to direct management and influence policies) and, as
a result, either the bonds are downgraded by S&P, Moodys, and/or Fitch from an investment grade rating to a
non-investment grade rating (or, if the bonds already carry a non-investment grade rating, they are downgraded by
S&P, Moodys and/or Fitch by at least one further notch) or the bonds carry no rating and no investment grade rating
is assigned by S&P and/or Moodys and/or Fitch. The rating action must occur within the CoC period, which starts on
the date of the CoC announcement (but not later than on the date of the change of control) and ends 60 days after
the CoC (the period is extended by a maximum of 60 days if the rating is placed under review within the CoC period).
Covenants
None
Other
Events of default include cross default of issuer/guarantor on indebtedness, subject to a carve-out of EUR100m
equivalent. Coupon steps up by 125bp in the case of a rating downgrade to non-investment grade or if rating is
withdrawn by Moodys, S&P and/or Fitch. Subsequently, coupon steps down by 125bp in the event that none of the
rating agencies give a rating below investment grade.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Anheuser-Busch InBev
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

23 Jun 2017 Anheuser-Busch


6.5%
InBev SA/NV
Step up
(see Other)

Multiple subsidiaries

GBP750m

Senior unsecured

30 Jul 2024
9.75%
Step up
(see Other)

Multiple subsidiaries

GBP550m

Senior unsecured

Anheuser-Busch
InBev SA/NV

Call
Tax call and make whole at German Bund (similar maturity to the remaining term of the notes) + 80bp (except for
Jan 2017 bond, at 85bp)
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantors and its significant subsidiaries. Relevant
indebtedness is defined as bonds, notes, other listed debt or debt traded over the counter. Significant subsidiaries are
deemed any subsidiary which constitutes 10% or more of the issuers consolidated revenue, consolidated EBITDA or
consolidated gross assets, respectively, as reflected in the issuers most recent annual audited financial statements.
Put
A put at 101% of the par after a put event. A put event occurs when there is a change of control (defined as 50% of
share capital or voting rights, indirectly or directly, or the power to direct management and influence policies) and as
a result, either the bonds are downgraded by S&P, Moodys, and/or Fitch from an investment grade rating to a
non-investment grade rating (or, if the bonds already carry a non-investment grade rating, they are downgraded by
S&P, Moodys and/or Fitch by at least one further notch) or the bonds carry no rating and no investment grade rating
is assigned by S&P and/or Moodys and/or Fitch. The rating action must occur within the COC period, which starts
on the date of the CoC announcement (but not later than on the date of the change of control) and ends 60 days
after the CoC (the period is extended by a maximum of 60 days if the rating is placed under review within the CoC
period).
Covenants
None
Other
Events of default include cross default of issuer/guarantor on indebtedness, subject to a carve-out of EUR100m
equivalent. Coupon steps up by 125bp in the case of a rating downgrade to non-investment grade or if rating is
withdrawn by Moodys, S&P and/or Fitch. Subsequently, coupon steps down by 125bp in the event that none of the
rating agencies give a rating below investment grade.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Anheuser-Busch InBev
Bond
Coupon

Maturity

Issuer

26 Apr 2018 Anheuser-Busch


4%
Step up
InBev SA/NV
(see Other)

Guarantor

Out amt

Type

Multiple subsidiaries

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantors and its significant subsidiaries. Relevant
indebtedness is defined as bonds, notes, other listed debt or debt traded over the counter. Significant subsidiaries
are deemed any subsidiary which constitutes 10% or more of the issuers consolidated revenue, consolidated
EBITDA or consolidated gross assets, respectively, as reflected in the issuers most recent annual audited financial
statements.
Put
A put at 101% of the par after a put event. A Put event occurs when there is a change of control (defined as 50% of
share capital or voting rights, indirectly or directly, or the power to direct management and influence policies) and, as
a result, either the bonds are downgraded by S&P, Moodys, and/or Fitch from an investment grade rating to a noninvestment grade rating (or, if the bonds already carry a non-investment grade rating, they are downgraded by S&P,
Moodys and/or Fitch by at least one further notch), or the bonds carry no rating and no investment grade rating is
assigned by S&P and/or Moodys and/or Fitch. The rating action must occur within the CoC period, which starts on
the date of the CoC announcement (but not later than on the date of the change of control) and ends 60 days after
the CoC (the period is extended by a maximum of 60 days if the rating is placed under review within the CoC period).
Covenants
None
Other
Events of default include cross default of issuer/guarantor on indebtedness, subject to a carve-out of EUR100m
equivalent. Coupon steps up by 125bp in the case of a rating downgrade to non-investment grade or is withdrawn by
Moodys, S&P and/or Fitch. Subsequently, coupon steps down by 125bp in the case where none of the rating
agencies give a rating below investment grade.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Cadbury
Bond
Coupon

Maturity

5.375%

7.25%

Issuer

Guarantor

Out amt

Type

11 Dec 2014 Cadbury Schweppes Cadbury Holdings Ltd,


Finance plc
Cadbury Schweppes
Investments Plc

GBP300m

Senior unsecured

18 Jul 2018

GBP350m

Senior unsecured

Cadbury Schweppes Cadbury Holdings Ltd,


Finance plc
Cadbury Schweppes
Investments Plc

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/guarantor. Relevant indebtedness means any loan or other
indebtedness which: (1) has a maturity of more than 12 months; or (2) is represented by bonds, notes, loan stock or other
securities other than advances made by banks. The latter definition excludes loans or indebtedness denominated in the
currency of the country in which the issuer has its principal place of business (GBP) except if more than 50% of the
indebtedness is placed or offered for subscription or sale outside this country. The negative pledge clause does not apply
to: (1) a security created after the date of issue of the notes in substitution for any security created by a company which
becomes a subsidiary of the issuer/guarantor, the value of which does not materially exceed the value of the security for
which it is being substituted; (2) any security created by the relevant issuer/guarantor upon an amount, or assets with a
value not exceeding the amount, of the proceeds of any such relevant indebtedness, or upon any assets, returns,
revenues acquired with the proceeds of any such relevant indebtedness.
Put
If a restructuring event occurs and within 90 days of the earlier of: (i) the first public announcement; and (ii) potential
restructuring event announcement (if any) a negative rating event or a rating downgrade happens as a result, the
bonds become puttable at par. A restructuring event is defined as a change of control on: (a) at least 50% of the
outstanding capital; or (b) such number of shares that represent more than 50% of the voting rights of the issuer.
A negative rating event is defined as the failure of the issuer to seek a rating or to obtain an investment grade rating.
A rating downgrade means a rating withdrawal or a downgrade to below investment grade or a one-notch downgrade
if already non-investment grade by either Moodys, S&P or Fitch.
Covenants
None
Other
Events of default include cross default of issuer/guarantor on capital market indebtedness in excess of GBP25m.
Capital market indebtedness is defined as loans or other indebtedness represented by bonds, notes, depositary
receipts or other quoted securities
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Carlsberg
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.625%

12 Dec 2011 Carlsberg Finans A/S Carlsberg Breweries A/S GBP250m

Type
Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers bonds, notes, debentures or other securities of the issuer, guarantor and the guarantors
subsidiaries, but excludes those that are denominated in Danish kroner and are primarily offered to persons resident
in Denmark.
Put
Bondholder put at par after a restructuring event and a consequent downgrade to non-investment grade ratings by
either S&P/Moodys. In the case that no senior unsecured debt is rated, then the put is valid if such debt is not
assigned an investment grade rating by either S&P/Moodys within 90 days of the restructuring event. A restructuring
event is defined as any of: (i) a change of control on shares carrying >50% of the guarantors voting rights; (ii) sale,
transfer, lease, or other disposal of property/assets representing >75% of the groups assets over a 12-month period;
(iii) the guarantor paying a dividend or shareholder distribution exceeding 50% of consolidated net worth (defined as
equity on balance sheet) over a 12-month period; (iv) the guarantor buying back 50% or more of its share capital
over a 12-month period; (v) the guarantor making or providing financial assistance to make acquisitions of an
aggregate value exceeding 65% of consolidated net worth over a 12-month period, but excluding cases where the
target is in a business similar to the ordinary business of the guarantor and its subsidiaries.
Covenants
None
Other
Events of default include cross default of the issuer, guarantor, or any principal subsidiary, subject to a carve-out
equivalent to the higher of: (a) DKK200m; and (b) 3.5% of consolidated net worth. A principal subsidiary is defined as
a subsidiary that represents 10% or more of the total consolidated assets or consolidated turnover of the whole group.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Carlsberg
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

7%

26 Feb 2013 Carlsberg Finans A/S Carlsberg Breweries A/S GBP200m

Type
Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers bonds, notes, debentures or other securities of the issuer, guarantor and the guarantors
subsidiaries, but excludes those that are denominated in Danish kroner and are primarily offered to persons resident
in Denmark.
Put
Bondholder put at par after a restructuring event and a consequent downgrade to non-investment grade ratings by
either S&P/Moodys. In the case that no senior unsecured debt is rated, then the put is valid if such debt is not
assigned an investment grade rating by either S&P/Moodys within 90 days of the restructuring event. A restructuring
event is defined as any of: (i) a change of control on shares carrying >50% of the guarantors voting rights; (ii) sale,
transfer, lease, or other disposal of property/assets representing >75% of the groups assets over a 12-month period;
(iii) the guarantor paying a dividend or shareholder distribution exceeding 50% of consolidated net worth (defined as
equity on balance sheet) over a 12-month period; (iv) the guarantor buying back 50% or more of its share capital
over a 12-month period; (v) the guarantor making or providing financial assistance to make acquisitions of an
aggregate value exceeding 65% of the higher of consolidated net worth and market value over a 12-month period,
but excluding cases where the target is in a business similar to the ordinary business of the guarantor and its
subsidiaries.
Covenants
None
Other
Events of default include cross default of the issuer, guarantor, or any principal subsidiary, subject to a GBP5m
carve-out. A principal subsidiary is defined as a subsidiary that represents 25% or more of the total consolidated
assets or consolidated turnover of the whole group.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Carlsberg
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

28 May 2014 Carlsberg Breweries None


6%
A/S
Step up
(see Other)

EUR1000m

Senior unsecured

7.25%
28 Nov 2016 Carlsberg Breweries None
Step up
A/S
(see Other)

GBP300m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and principal subsidiaries. Relevant Indebtedness is
defined as bonds, notes, other listed debt or debt traded over the counter. A principal subsidiary is a subsidiary
accounting for at least 10% of the consolidated assets or consolidated operating income of the issuer in the latest
audited accounts, or a subsidiary to which are transferred all of the assets of a principal subsidiary. A certificate of
two authorised signatories of the issuer that in their opinion a subsidiary is or is not a principal subsidiary shall be
conclusive and binding on the issuer and the noteholders.
Put
Put at par in the event of a change of control and a rating downgrade or negative rating event by either Moodys or Fitch
during the change of control period. The period is defined as commencing on the earlier of the date of relevant CoC and the
date of earliest relevant potential CoC announcement (if any, with the COC happening no more than 180 days later), and
ending 90 days after relevant change of control occurs. A change of control is defined by the acquisition (indirectly or
directly) of >50% of the voting rights of the issuer. A rating downgrade is defined as a downgrade to non-investment grade,
or, if already below investment grade, a further downgrade of one or more notches (Ba1/BB+ to Ba2/BB being one notch),
or a withdrawal of the rating. A negative rating event shall be deemed to have occurred if no rating has been assigned and
the issuer does not seek to obtain a rating or if it is not at least at investment grade by the end of the CoC period.
Covenants
None
Other
Events of default include cross default of issuer/principal subsidiaries, subject to a carve-out of EUR50m equivalent.
A principal subsidiary is a subsidiary accounting for at least 10% of the consolidated assets or consolidated
operating income of the issuer in the latest audited accounts, or a subsidiary to which are transferred all of the assets
of a principal subsidiary. Coupon steps up by 125bp in the event of a rating downgrade to non-investment grade or
withdrawn by either or both Moodys and Fitch. Subsequently, coupon steps down by 125bp in the event of a rating
upgrade by both agencies to at least Baa3/BBB-.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Coca-Cola Enterprises
Bond
Coupon

Maturity

6.5%
6.5%

Issuer

Guarantor

Out amt

Type

07 Dec 2016 Coca-Cola Enterprises None


Inc

GBP175m

Senior unsecured

07 Jun 2021 Coca-Cola Enterprises None


Inc

GBP175m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers secured debt of Coca-Cola Enterprises Inc or any restricted subsidiary, subject to a carveout equivalent to 15% of consolidated shareholders equity (as shown on the consolidated financial statements of
Coca-Cola Enterprises Inc as of the end of the latest fiscal year). Secured debt includes bonds, notes, debentures or
other similar indebtedness that is secured by a mortgage on any principal property, or on shares or indebtedness of
a restricted subsidiary. The pledge excludes, among other things, mortgages on property, shares or indebtedness of
assets to-be-acquired that exist either at the time of acquisition or at 27 September 1997. Sale and leaseback
transactions of principal property by Coca-Cola Enterprises Inc or any restricted subsidiary are prohibited, unless
Coca-Cola Enterprises Inc /restricted subsidiary could create indebtedness secured by a mortgage upon such
property at least equal in amount to the indebtedness attributable to such sale and leaseback transaction without
equally and rateably securing the instruments. Other restrictions on sale and leaseback transactions also apply. A
restricted subsidiary includes Coca-Cola Enterprises GB plc and any other subsidiary that owns or leases a principal
property, and has most of its business or property in the US (including Puerto Rico). A principal property includes
any materially important bottling plant in the USA (including Puerto Rico).
Put
None
Covenants
None
Other
Events of default include cross default of Coca-Cola Enterprises Inc on indebtedness of borrowed money in excess
of USD15m (in excess of USD50m for Coca-Cola Enterprises Inc bond maturing 22-May-06). For bonds where the
issuer is Coca-Cola Enterprises Investments Commandite Sca, the cross default covers both the issuer and
Coca-Cola Enterprises Inc, with a carve-out of USD10m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Coca-Cola Hellenic Bottling


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.375%

15 Jul 2011

Coca-Cola HBC
Finance BV

Coca Cola HBC Finance EUR500m


BV, Coca Cola Hellenic
Bottling Co SA

Type
Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/guarantor/material subsidiary. Relevant indebtedness is
defined as any indebtedness represented by bonds, notes, debenture, debenture stock, loan stock, certificate or
other quoted instrument. Material subsidiary means a subsidiary of CCHBC representing 7% or more of consolidated
net sales revenues.
Put
None
Covenants
None
Other
Events of default include cross default of issuer/guarantor/material subsidiary on indebtedness in excess of
EUR10m. Change in the controlling shareholder is also an event of default ie if the Coca Cola Company ceases to
be the direct or indirect owner of at least 20% of the issued voting share capital
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Danone
Bond
Coupon

Maturity

5.25%
5.5%

Issuer

Guarantor

Out amt

Type

06 May 2011 Groupe Danone SA

None

EUR698m

Senior unsecured

06 May 2015 Groupe Danone SA

None

EUR675m

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, (if applicable) guarantor, and its subsidiaries.
Relevant indebtedness includes bonds, notes, debentures, loan stock or other securities, which are, or are capable
of being, listed on any stock exchange or over the counter market or other securities market.
Put
Bondholder put at par after a change of control (CoC) and a rating downgrade within the CoC Period. Control means
holding/acquisition, directly or indirectly, more than 50% of Group Danones voting rights. A rating downgrade
means: (i) a rating withdrawal by either S&P, Moodys and/or Fitch; (ii) a downgrade from investment grade to noninvestment grade by S&P, Moodys and/or Fitch; or (iii) a one-notch downgrade from any non-investment grade
rating by either S&P, Moodys and/or Fitch. The CoC period begins on the date of the first public announcement of
the CoC and ends 90 days thereafter, or commencing 180 days prior to the date of the first public announcement
and ending on the date of the announcement. The issuer has a clean-up call if 80% or more of the bonds have been
tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer and principal subsidiaries on obligations subject to a EUR75m
carve-out. A principal subsidiary is a subsidiary of Groupe Danone or Danone Finance accounting for at least 15% of
the total consolidated assets or gross consolidated revenues of Groupe Danone or Danone Finance in the latest
audited accounts, or a subsidiary to which are transferred all or most of the assets of a previous principal subsidiary.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Danone
Bond
Coupon

Maturity

Issuer

6.375%

04 Feb 2014 Danone Finance SA

Guarantor

Out amt

Type

Groupe Danone SA

EUR702m

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers relevant indebtedness of the issuer or guarantor. Relevant indebtedness includes bonds or
notes issued by the issuer or any of its subsidiaries or the guarantor which is, or is capable of being, quoted, listed or
ordinarily dealt in on any stock exchange or any other securities market. The negative pledge does not apply to
subordinated notes.
Put
Bondholder put at par after a change of control (CoC) and a rating downgrade within the CoC period. Control means
the acquisition/control of 50% of Groupe Danones voting rights, this excludes any entity under control of Groupe
Danone prior to the CoC. A rating downgrade means: (i) a rating withdrawal by either S&P or Fitch; (ii) a downgrade
from investment grade to non-investment grade by either S&P or Fitch; or (iii) a one-notch downgrade from any noninvestment grade rating by either S&P or Fitch. The CoC period means (1) the period from the date of the first public
announcement of the relevant CoC and ending 90 days thereafter; or (2) the period commencing 180 days before
the date of first public announcement of the relevant CoC and ending on the date of the announcement. The issuer
has a clean-up call if 80% or more of the bonds have been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of issuer/principal subsidiaries, subject to a carve-out of EUR100m. A
principal subsidiary is a subsidiary of Groupe Danone or Danone Finance accounting for at least 15% of the total
consolidated assets or gross consolidated revenues of Groupe Danone or Danone Finance in the latest audited
accounts, or a subsidiary to which are transferred all or most of the assets of a previous principal subsidiary.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fonterra
Bond
Coupon

Maturity

Issuer

Guarantor

4.875%

11 Apr 2013 Fonterra Co-operative None


Group Ltd

Out amt

Type

GBP250m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/principal subsidiaries. Relevant indebtedness is defined
as any indebtedness represented by bonds, notes, debenture, debenture stock, loan stock, certificate or other quoted
instruments. Principal subsidiaries mean any subsidiary representing at least 10% of total assets or total net sales
Put
None
Covenants
None
Other
Events of default include cross default of issuer/subsidiaries on indebtedness in excess of the greater of 1% of total
assets and NZD10m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Fonterra
Bond
Coupon

Maturity

Issuer

Guarantor

9.375%

04 Dec 2023 Fonterra Co-operative None


Group Ltd

Out amt

Type

GBP225m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/principal subsidiaries. Relevant indebtedness is defined
as any indebtedness represented by bonds, notes, debenture, debenture stock, loan stock, certificate or other quoted
instruments. Principal subsidiaries mean any subsidiary representing at least 10% of total assets or total net sales
Put
Put at par in the occurrence of a change of control and a rating downgrade by either Moodys, S&P or Fitch during the
change of control period. The period is defined as commencing on the earlier of the date of relevant CoC and the date
of the earliest relevant potential CoC announcement, and ending 120 days after relevant change of control occurs
(if under review before end of CoC, the CoC period is extended by 90 days from the date of such announcement).
A change of control is defined by the acquisition (indirectly or directly) of >50% of the voting rights of the issuer. CoC
does not apply where: i) the shareholders of such company is restricted to New Zealand diary farmers; ii) voting rights
allocated to the NZ diary farmers are similar to that of the issuer as at 4 December 2008; and iii) no single NZ dairy
farmer has 50% voting rights in such company. A rating downgrade is defined as a downgrade to non-investment
grade, or, if already below investment grade, a further downgrade of one or more notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include cross default of issuer/subsidiaries on indebtedness in excess of the greater of 1% of total
assets and NZD10m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Heineken
Bond
Coupon

Maturity

7.125%
7.25%

Issuer

Guarantor

Out amt

Type

07 Apr 2014 Heineken NV

None

EUR1000m

Senior unsecured

10 Mar 2015 Heineken NV

None

GBP400m

Senior unsecured

Call
Tax call/Clean-up call (see put provision)
Negative pledge
Negative pledge covers capital market indebtedness of the Issuer. Capital market indebtedness includes bonds,
notes or other securities that are or are capable of being quoted, listed, dealt or traded on any stock exchange or
recognised securities market.
Put
Put at par following a change of control (ownership of >50% of shares with voting power or the right to control the
composition of the majority of the board). Acquisition of control by family members or their successors by inheritance
does not constitute a put event. The issuer has a clean-up call if 80% or more of the bonds have been tendered
following the activation of the clause.
Covenants
None
Other
Events of default include cross default on capital market indebtedness of the issuer, subject to a carve-out of
EUR25m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

HJ Heinz
Bond
Coupon

Maturity

Issuer

Guarantor

6.25%

18 Feb 2030 Heinz (H.J.) Finance HJ Heinz Company


Plc

Out amt

Type

GBP125m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers bonds, notes, debentures or other listed securities of the guarantor/subsidiaries. Carves out
secured debt representing less than 10% of consolidated adjusted net assets (defined as total assets appearing on
the most recently prepared consolidated balance sheet of the guarantor/subsidiaries as at the end of the fiscal quarter
of the guarantor, prepared under US GAAP less all current liabilities due within one year. Subsidiaries mean any
corporation, association or other business entity which is accounted for on a fully consolidated basis by the guarantor
Put
None
Covenants
None
Other
Events of default include cross default of the issuer/guarantor on bonds, notes, debentures or other quoted debt securities
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Pernod Ricard
Bond
Coupon

Maturity

1.154%
4.625%

Issuer

Guarantor

Out amt

Type

06 Jun 2011 Pernod Ricard

None

EUR300m

Senior unsecured

06 Dec 2013 Pernod Ricard

None

EUR550m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/principal subsidiaries. Relevant indebtedness is defined
as any indebtedness represented by bonds or other securities that are quoted, listed, traded on any stock exchange,
OTC or other securities market. Principal subsidiaries means a subsidiary that represents no less than 10% of the
groups total gross assets.
Put
Bondholder put at par if there is: (a) a change of control (CoC); and (b) a negative rating event occurring within the
CoC period. Control means a person or group of persons acting in concert to directly or indirectly gain control of the
Issuer, but excludes SA Paul Ricard or any group acting in concert with them. A negative rating event means: (a) if
the corporate credit rating (CCR) is non-investment grade with either S&P or Moodys and there is a downgrade from
either S&P or Moodys, with the result being that both S&P and Moodys CCR end up below Ba2/BB; (b) if both S&P
and Moodys CCR are investment grade and both are downgraded to below investment grade; or (c) either the S&P
or Moodys rating is withdrawn as a result of the CoC. The CoC period is the period commencing from the first formal
public announcement of the CoC and up to 90 days after.
Covenants
None
Other
Events of default include cross default of issuer/principal subsidiary on indebtedness in excess of EUR75m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Pernod Ricard
Bond
Coupon

Maturity

Issuer

7%

15 Jan 2015 Pernod Ricard

Guarantor

Out amt

Type

None

EUR800m

Senior Unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, which means bonds, notes or other securities which
are capable of being, quoted, listed or ordinarily traded on any stock exchange, OTC market or other securities market.
Put
Put at par in case of change of control (direct/indirect control of the issuer) resulting in a rating downgrade by one full
notch below Ba1/BB+ within the change of control period (90 days after the announcement of the change of control).
Covenants
None
Other
Events of default include cross default of the issuer/principal subsidiary on indebtedness in excess of EUR100m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Pernod Ricard
Bond
Coupon

Maturity

Issuer

Guarantor

6.625%

18 Apr 2011 Allied Domecq


Allied Domecq Plc
Financial Services Plc

Out amt

Type

GBP450m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers non-sterling denominated obligations (bonds, debentures and other quoted securities) of the
Issuer and subsidiaries
Put
None
Covenants
None
Other
Events of default include cross default of issuer/any principal subsidiary on indebtedness in excess of GBP25m. A
principal subsidiary is defined as a subsidiary whose gross assets represent at least 20% of the consolidated gross
assets, or whose annualised turnover represent at least 20% of consolidated annualised turnover, as shown in the
most recent published audited consolidated accounts.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Pernod Ricard
Bond
Coupon

Maturity

Issuer

Guarantor

6.625%

12 Jun 2014 Allied Domecq


Allied Domecq Plc
Financial Services Plc

Out amt

Type

GBP250m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers non-sterling-denominated obligations (bonds, debentures and other quoted securities) of the
issuer and principal subsidiaries. A principal subsidiary is defined as a subsidiary whose gross assets represent at
least 20% of the consolidated gross assets, or whose annualised turnover represent at least 20% of consolidated
annualised turnover as shown by the most recent published audited consolidated accounts
Put
None
Covenants
None
Other
Events of default include cross default of issuer/any principal subsidiary on indebtedness in excess of GBP35m.
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

SABMiller
Bond
Coupon

Maturity

Issuer

4.5%

20 Jan 2015 SABMiller plc

Guarantor

Out amt

Type

None

EUR1000m

Senior unsecured
under the companys
USD5bn EMTN
programme

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer/principal subsidiaries (bonds, notes, debentures or
other securities which are capable of being quoted, listed or dealt in or traded on any stock exchange or OTC market
with maturities >365 days) but excludes permitted security interest
Put
Put at par in case of change of control (interest in more than 50% of the shares/voting rights) resulting in a rating
downgrade to non-investment grade or by one or more rating categories if the ratings are already non-investment
grade within the change of control period (90 days after the occurrence of the change of control).
Covenants
None
Other
Events of default include cross default of the issuer/principal subsidiaries on indebtedness in excess of USD125m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Suedzucker
Bond
Coupon

Maturity

Issuer

Guarantor

5.75%

27 Feb 2012 Suedzucker


Suedzucker AG
International Finance
BV

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers bonds, notes, debentures or similar debt instruments of the issuer
Put
None
Covenants
None
Other
Events of default include cross default of issuer/guarantor on borrowing obligations defined as bonds, notes or other
debt instruments, or any other loan indebtedness of an amount of at least EUR15m
Source: Company data, HSBC

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Corporate Bond Covenants
September 2010

Tate & Lyle


Bond
Coupon

Maturity

Issuer

Guarantor

6.5%

28 Jun 2012 Tate & Lyle


Tate & Lyle Plc
International Finance
Plc

Out amt

Type

GBP100m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/guarantor/principal subsidiary. Relevant indebtedness
means any indebtedness which: a) has a maturity of over one year; b) is represented by bonds, notes, debentures,
loan stock or other quoted securities denominated in a currency other than the domestic currency (ie applies to nonsterling-denominated debt) or as to more than 50% are issued, placed or offered outside the domestic sterling market
Put
None
Covenants
None
Other
Events of default include cross default of issuer/guarantor/principal subsidiary on indebtedness for borrowed monies
in excess of GBP10m. Principal subsidiary is defined as a subsidiary representing more than 15% of consolidated
turnover or total net profits or total net worth
Source: Company data, HSBC

259

abc

European Credit Research


Corporate Bond Covenants
September 2010

Tate & Lyle


Bond
Coupon

Maturity

Issuer

Guarantor

25 Nov 2019 Tate & Lyle


Tate & Lyle Plc
6.75%
Step Up
International Finance
(see Other)
Plc

Out amt

Type

GBP200m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer/guarantor/principal subsidiary. Relevant indebtedness
means any indebtedness which: a) has a maturity of over one year; b) is represented by bonds, notes, debentures,
loan stock or other quoted securities denominated in a currency other than the domestic currency (ie applies to nonsterling denominated debt), or as to more than 50% are issued, placed or offered outside the domestic sterling market
Put
Bondholder put at par after a put event. A put event occurs when there is a change of control and, as a result, the
bonds are downgraded by S&P and/or Moodys from an investment grade rating to a non-investment grade rating
within 120 days. If the bonds already carry a non-investment grade rating from each rating agency or if the bonds are
not rated, a put event will be deemed to occur in the event of a change of control alone.
Covenants
None
Other
Events of default include cross default of issuer/guarantor/principal subsidiary on indebtedness for borrowed monies
in excess of GBP10m. Principal subsidiary is defined as a subsidiary representing more than 15% of consolidated
turnover or total net profits or total net worth. Coupon steps up by 125bp in the case of a rating downgrade to noninvestment grade or if the rating is withdrawn by Moodys and/or S&P. Subsequently, coupon steps down by 125bp
in the event that none of the rating agencies give a rating below investment grade.
Source: Company data, HSBC

260

European Credit Research


Corporate Bond Covenants
September 2010

abc

Consumer Services

261

abc

European Credit Research


Corporate Bond Covenants
September 2010

Accor
Bond
Coupon

Maturity

6.5%
7.5%

Issuer

Guarantor

Out amt

Type

06 May 2013 Accor

None

EUR600m

Senior unsecured

04 Feb 2014 Accor

None

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant debt of the issuer. Relevant debt includes bonds, notes or debentures that are, or
are capable of being, quoted, listed or ordinarily dealt in on any stock exchange.
Put
Put at par in the event of a change of control and a rating downgrade by either Moodys, S&P or Fitch during the
change of control period. The period is defined as commencing on the earlier of the date of relevant CoC and the
date of earliest relevant potential CoC announcement, and ending 90 days after the relevant change of control
occurs. A change of control is defined by the acquisition (indirectly or directly) of >50% of the voting rights of the
Issuer. A rating downgrade is defined as a downgrade to non-investment grade, or if already below investment
grade, a further downgrade of one or more notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include cross default of the issuer on indebtedness in excess of EUR100m.
Source: Company data, HSBC

262

abc

European Credit Research


Corporate Bond Covenants
September 2010

Carnival
Bond
Coupon

Maturity

Issuer

4.25%

27 Nov 2013 Carnival Plc

Guarantor

Out amt

Type

Carnival Corp

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers notes, bonds, debentures or similar indebtedness of the issuer/guarantor that have original
maturity of more than one year and not existing before 22 November 2006. This excludes: (i) any security interest
upon a company that is acquired by the issuer or guarantor after 22 November 2006 where such security interest is
created before the acquisition date and not in relation to the acquisition; (ii) any security interest on debt incurred
with a specific project where recourse is more than 85% limited to such assets.
Put
Bondholder put at par after a put event. Put event occurs when any person or persons acting in concert own shares
(directly or indirectly) representing more than 50% of voting rights, and within 90 days, either: (A) the bonds are
downgraded from an investment grade rating to a non-investment grade rating; (B) the bonds already carry a noninvestment grade rating and are downgraded by at least one further notch; or (C) the bonds carry no rating and no
investment grade rating is assigned within 90 days. The relevant rating agencies are Moodys and S&P.
Covenants
None
Other
None
Source: Company data, HSBC

263

abc

European Credit Research


Corporate Bond Covenants
September 2010

Carnival
Bond
Coupon

Maturity

Issuer

25 Jun 2012 Carnival Plc


7.125%
Step up
(see Other)

Guarantor

Out amt

Type

P&O Princess Cruises


International Ltd.

GBP200m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers notes, bonds, debentures or similar indebtedness of the issuer and any subsidiary of which
the issuer directly or indirectly owns at least 80% of voting shares. This is subject to a carve-out equivalent to 20% of
consolidated net tangible assets of the issuer and its subsidiaries, as calculated in the audited consolidated balance
sheet in the latest annual report. The carve-out is applicable to the aforementioned indebtedness plus the lower of:
(a) the fair value of the property; and (b) the present value of rental payments (using a discount rate equal to the
interest on the notes) in respect of sale and leaseback transactions. Sale and leaseback transactions of a principal
property by the issuer or any subsidiary are prohibited, unless: (a) the property can be secured within the negative
pledge but without equally securing the notes, (b) the transaction takes place between the issuer and subsidiaries,
(c) the lease term is less than three years; or (d) the property concerned is the M.V. Golden Princess. A principal
property is a ship or property with net book value exceeding the higher of GBP25m and 0.5% of the consolidated net
tangible assets, or shares in the capital of any subsidiary owning such ship or property. There are also several other
terms in the documentation; please refer to the prospectus for further details.
Put
Bondholder put at par after a put event. A put event occurs when an offer is made for more than 50% of the shares
and voting rights of the issuer, and within 90 days, either: (A) the bonds are downgraded from an investment grade
rating to a non-investment grade rating; (B) the bonds already carry a non-investment grade rating and are
downgraded by at least one further notch; or (C) the bonds carry no rating and no investment grade rating is
assigned within 90 days. The relevant rating agencies are Moodys and S&P.
Covenants
None
Other
Events of default include default of the issuer, guarantor and any principal subsidiary, subject to a carve-out of the
greater of GBP25m and 0.5% of the consolidated net tangible assets. A principal subsidiary is a subsidiary whose
relevant total assets or total turnover are 10% or more of the consolidated relevant total assets or total turnover. Relevant
total assets equal the total assets of the subsidiary less all receivables due from the issuer and all subsidiaries and less
all intangible assets. If the notes are downgraded from an investment grade rating to a non-investment grade rating by
either S&P or Moodys, the coupon will be increased by 1% pa. If the notes are subsequently upgraded back to an
investment grade rating by both S&P and Moodys, the coupon will be decreased by 1% pa.
Source: Company data, HSBC

264

abc

European Credit Research


Corporate Bond Covenants
September 2010

Compass
Bond
Coupon

Maturity

Issuer

6.375%

29 May 2012 Compass Group Plc

Guarantor

Out amt

Type

None

GBP325m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any principal subsidiary. Relevant indebtedness
includes bonds, notes, loan stock, depositary receipts or other securities which, on their date of issue, are or are
intended to be quoted, listed, traded or dealt in on any stock exchange, OTC or other securities market. The
definition excludes indebtedness that is denominated in GBP or of which over 20% is distributed or intended to be
distributed outside the UK. A principal subsidiary is a subsidiary whose turnover or gross assets represent 10% or
more of the consolidated turnover or gross assets in the latest published audited accounts.
Put
Bondholder put at par after a put event. A put event occurs when there is a restructuring event, and within 90 days of
the restructuring event the bonds are downgraded from an investment grade rating to a non-investment grade rating
or have their rating withdrawn. The relevant rating agencies are Moodys and S&P. A restructuring event includes:
(A) an offer is made for more than 50% of the shares and voting rights of the issuer; (B) within any 12-month period,
the issuer and/or any subsidiary sells, transfers, leases or disposes of the majority of its undertaking/property/assets
(except when in the ordinary course of its business); (C) within any 12-month period, the issuer pays or declares
dividends exceeding 50% of consolidated tangible net worth; (D) buybacks of 50% or more of its shares occur in any
12-month period; (E) within any 12-month period, the issuer acquires, or provides financial assistance for the
acquisition of, assets where the cost or value of assistance exceeds 50% of consolidated tangible net worth,
excluding any acquisitions of or financial assistance to subsidiaries and their assets.
Covenants
None
Other
Events of default include default of the issuer and any material subsidiary, subject to a carve-out of the greater of
GBP10m and 1.5% of shareholders funds adjusted for goodwill written off.
Source: Company data, HSBC

265

abc

European Credit Research


Corporate Bond Covenants
September 2010

Compass
Bond
Coupon

Maturity

Issuer

7%

08 Dec 2014 Compass Group Plc

Guarantor

Out amt

Type

None

GBP250m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any subsidiary. Relevant indebtedness includes bonds,
notes or other securities which have a maturity of more than one year, and are quoted, listed, traded or dealt in on any
stock exchange. If such indebtedness is denominated in pounds sterling or euro, then the pledge applies only if it is not
primarily distributed to persons resident in the UK. If such indebtedness is denominated in any other currency, then the
pledge applies only if it is not primarily distributed to persons resident in the jurisdiction of such currency.
Put
Bondholder put at par after a put event. A put event occurs when there is a restructuring event, and, within 90 days
of the restructuring event, the bonds are downgraded from an investment grade rating to a non-investment grade
rating or have their rating withdrawn. The relevant rating agencies are Moodys and S&P. A restructuring event
includes: (A) an offer is made for more than 50% of the shares and voting rights of the issuer; (B) within any 12month period, the issuer and/or any subsidiary sells, transfers, leases or disposes of the majority of its
undertaking/property/assets (except when in the ordinary course of its business); (C) within any 12-month period, the
issuer pays or declares dividends exceeding 50% of consolidated tangible net worth; (D) buybacks of 50% or more
of its shares occur in any 12-month period; (E) within any 12-month period, the issuer acquires, or provides financial
assistance for the acquisition of, assets where the cost or value of assistance exceeds 50% of consolidated tangible
net worth, excluding any acquisitions of or financial assistance to subsidiaries and their assets.
Covenants
None
Other
Events of default include default of the issuer and any principal subsidiary, subject to a carve-out of the greater of
GBP10m and 1% of issued share capital and consolidated reserves as shown in the latest audited consolidated
accounts. A principal subsidiary is defined as a subsidiary whose gross assets or pre-tax profits exceed 10% of the
consolidated gross assets or pre-tax profits.
Source: Company data, HSBC

266

abc

European Credit Research


Corporate Bond Covenants
September 2010

Experian
Bond
Coupon

Maturity

Issuer

5.625%

12 Dec 2013 GUS Plc

Guarantor

Out amt

Type

None

GBP335m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its subsidiaries. Relevant indebtedness is
defined as bonds, notes and other listed debt. The definition excludes listed loans primarily and initially offered to
investors in the UK or denominated in sterling, debt maturing within one year as well as non-recourse debt.
Put
Bondholder put at par on change of control on the issuers holding company and: (1) consequent downgrade to noninvestment grade by S&P or Moodys; or (2) if the notes are not rated by either S&P or Moodys.
Covenants
None
Other
Events of default include default of the issuer and material subsidiaries subject to a GBP20m carve out. A material
subsidiary is defined as a subsidiary accounting for at least 10% of consolidated turnover in the most recently
published audited accounts. A certificate signed by two directors of the issuer, stating that a subsidiary is or is not a
material subsidiary, is binding on all parties provided that the figures used in that certificate have been confirmed in
writing by the auditors as being extracted from the most recently published audited accounts.
Source: Company data, HSBC

267

abc

European Credit Research


Corporate Bond Covenants
September 2010

Experian
Bond
Coupon

Maturity

Issuer

Guarantor

4.75%

04 Feb 2020 Experian Finance plc Experian plc

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, the guarantors and its material subsidiaries.
Relevant indebtedness is defined as bonds, notes, debentures, loan stock or any similar instrument. Material
subsidiaries are deemed any subsidiary which constitutes more than 10% of the issuers consolidated revenue, as
reflected in the issuers consolidated financial statements.
Put
Bondholder put at par on change of control on the issuers holding company and: (1) consequent downgrade to noninvestment grade by S&P or Moodys; or (2) if the notes are not rated by either S&P or Moodys.
Covenants
None
Other
Events of default include default of the issuer and material subsidiaries subject to a USD75m carve-out.
Source: Company data, HSBC

268

abc

European Credit Research


Corporate Bond Covenants
September 2010

InterContinental Hotels
Bond
Coupon

Maturity

Issuer

09 Dec 2016 InterContinental


6%
Step up
Hotels Group plc
(see Other)

Guarantor

Out amt

InterContinental Hotels GBP250m


Ltd, Six Continents Ltd

Type
Senior unsecured

Call
Spens call at higher of par or 0.5% + gross redemption yield of UKT 4% 2016. Also callable for taxation reasons.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantors and its material subsidiaries. Relevant
indebtedness is defined as bonds, notes, debentures, debenture stock, loan stock or other securities which have a
maturity over one year. Significant subsidiaries are deemed any subsidiary whose gross assets represent 10% or
more of the issuers consolidated gross assets or whose EBITDA represents 5% or more of the consolidated
EBITDA of the group, as calculated in the most recent audited financial statements.
Put
Bondholder put at par after a put event. A put event occurs when any person or persons acting in concert own
shares (directly or indirectly) representing more than 50% of voting rights, and within 90 days, either: (A) the bonds
are downgraded from an investment grade rating to a non-investment grade rating; (B) the bonds already carry a
non-investment grade rating and are downgraded by at least one further notch; or (C) the bonds carry no rating and
no investment grade rating is assigned within 90 days. The relevant rating agencies are S&P, Moodys and Fitch.
Covenants
None
Other
Events of default include cross default of issuer/guarantor on indebtedness, subject to a carve-out of USD50m
equivalent. Coupon steps up by 125bp in the event of a rating downgrade to non-investment grade or if the rating is
withdrawn by Moodys, S&P and/or Fitch. Subsequently, coupon steps down by 125bp in the event that none of the
rating agencies give a rating below investment grade.
Source: Company data, HSBC

269

abc

European Credit Research


Corporate Bond Covenants
September 2010

McDonalds
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

6.25%

20 Jul 2012

McDonalds Corp

None

EUR300m

Senior unsecured

6.375%

03 Feb 2020 McDonalds Corp

None

GBP200m

Senior unsecured

5.875%

23 Apr 2032 McDonalds Corp

None

GBP250m

Senior unsecured

Call
For 2012 bond: make-whole call reference rate is 10bp plus the mid-rate yield of the straight-line interpolation between
two market-accepted constituents of the French government yield curve to match the maturity of the bond; For 2020 bond:
spens call reference UKT 8% 2021; For 2032 bond: spens call reference UKT 4.25% 2032. Bonds also callable for
taxation reasons.
Negative pledge
Negative pledge covers the public indebtedness of the issuer and affects only real property mortgages, defined as
mortgages on land, leases and buildings. Public indebtedness is defined as debt incurred in connection with an
acquisition evidenced by securities publicly distributed.
Put
None
Covenants
None
Other
Events of default include default of the issuer.
Source: Company data, HSBC

270

abc

European Credit Research


Corporate Bond Covenants
September 2010

Royal Caribbean Cruises


Bond
Coupon

Maturity

Issuer

5.625%

27 Jan 2014 Royal Caribbean


Cruises Ltd

Guarantor

Out amt

Type

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers secured debt of the issuer and restricted subsidiaries, excluding permitted encumbrances
and subject to a carve-out of such amount equivalent to 10% of the consolidated net tangible assets. Secured debt
means debt which is secured by a mortgage on a principal property (owned or leased property that has a net book
value exceeding 5% of the consolidated net tangible assets). Restricted subsidiaries are subsidiaries that own or
lease a principal property. Permitted encumbrances include: mortgages existing at the time of issue; mortgages in
favour of the Issuer or any restricted subsidiary; certain purchase money mortgages to secure the purchase price or
construction cost of property; among others.
Put
Put at 101% of the par if there is a change of control (CoC) and this is followed by: (i) a decrease in ratings such that
after such downgrade the notes are not rated investment rate or (ii) withdrawal of ratings, within the Coc period. CoC
is defined as any interest in more than 50% of voting rights, excluding by A. Wilhelmsen AS, Cruise Associates or its
affiliates; or a transfer/lease of substantially all of the companys properties and assets as an entirety to a third party.
The CoC period is the period commencing from the public announcement of the CoC and up to 90 days after,
although this can be extended to 180 days if the ratings are under review, provided that the review was initiated
within 90 days of the CoC.
Covenants
Restriction on sale and leaseback transactions covers the issuer and restricted subsidiaries for transactions involving
principal properties. A sale and leaseback can only take place if: (a) secured debt can be raised on the relevant
principal properties without breaching the negative pledge clause; or (b) the asset is sold for at least its market value
and within a year all of the net proceeds are used to buy back debt or purchase properties.
Other
Events of default include default of the issuer subject to a USD50m carve-out.
Source: Company data, HSBC

271

abc

European Credit Research


Corporate Bond Covenants
September 2010

Sodexo
Bond
Coupon

Maturity

Issuer

Guarantor

4.5%

28 Mar 2014 Sodexho Alliance SA Sodexho Inc.

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant debt of the issuer. A relevant debt is defined as bonds, notes, or other listed
debt traded on an exchange or over the counter.
Put
Bondholder put at par after a change of control (CoC) and a rating downgrade within the CoC period. Control means
any person or persons acting in concert coming to own shares representing more than 50% of the issuers voting
rights, but this excludes any company or legal entity whose share capital and voting rights are controlled by Pierre
Bellon and his heirs/successors. A rating downgrade means: (i) a rating withdrawal by either S&P or Fitch; (ii) a
downgrade from investment grade to non-investment grade by either S&P or Fitch; or (iii) a downgrade from any
non-investment grade rating by either S&P or Fitch, provided that this action results from the CoC. The CoC period
begins on the date of the first public announcement of the result of the CoC and ends 90 days after (inclusive).
Alternatively, the put can also be triggered if a rating downgrade occurs as a result of a CoC or potential CoC (any
public announcement by the issuer or a potential bidder regarding a potential CoC) within the potential CoC period
(120 days prior to the first public announcement of the result of the CoC).
Covenants
None
Other
Events of default include default of the issuer and material subsidiaries, subject to a EUR50m carve-out. A material
subsidiary is a subsidiary accounting for 10% of consolidated revenues, operating profit, or gross assets in the latest
audited financial statements. Events of default also include any adverse rating action, which is defined as a
downgrade/credit watch/negative outlook resulting solely from the removal of the guarantee from Sodexho Inc on
Sodexho Alliance for any other reason than by law.
Source: Company data, HSBC

272

abc

European Credit Research


Corporate Bond Covenants
September 2010

Sodexo
Bond
Coupon

Maturity

Issuer

Guarantor

6.25%

30 Jan 2015 Sodexho Alliance SA None

Out amt

Type

EUR880m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant debt of the issuer. Relevant debt is defined as bonds, notes, or other listed debt
traded on an exchange or over the counter.
Put
Bondholder put at par after a change of control (CoC) or potential CoC and a rating downgrade within the CoC
period or potential CoC period. Control means any person or persons acting in concert coming to own shares
representing more than 50% of the issuers voting rights, but this excludes any entity whose share capital and voting
rights are controlled by Pierre Bellon and his heirs/successors. A rating downgrade means: (i) a rating withdrawal by
any agency solicited by the issuer; (ii) a downgrade from investment grade to non-investment grade by any agency
solicited by the issuer; or (iii) a one-notch downgrade from any non-investment grade rating by any agency solicited
by the issuer, provided that this action results from the CoC. The CoC period begins on the date of the first public
announcement of the result of the CoC and ends 90 days after (inclusive). The potential CoC period begins 120 days
prior to the first public announcement of the result of the CoC and ends on the date of such announcement.
Covenants
None
Other
Events of default include default of the issuer and material subsidiaries, subject to a EUR50m carve-out. A material
subsidiary is a subsidiary accounting for 10% of consolidated revenues, operating profit, or gross assets in the latest
audited financial statements. Events of default also include any adverse rating action, which is defined as a
downgrade/credit watch/negative outlook resulting solely from the removal of the guarantee from Sodexho Inc on
Sodexho Alliance for any other reason than by law.
Source: Company data, HSBC

273

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thomas Cook
Bond
Coupon

Maturity

6.75%
7.75%

Issuer

Guarantor

Out amt

Type

22 Jun 2015 Thomas Cook Group plc Multiple subsidiaries

EUR400m

Senior unsecured

22 Jun 2017 Thomas Cook Group plc Multiple subsidiaries

GBP300m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers financial indebtedness of the issuer, the guarantors and its material subsidiaries. Financial
indebtedness is defined as bonds, notes, debentures, loan stock or any similar instrument. Material subsidiaries are
deemed any subsidiary which constitutes 10% or more of the issuers revenue, EBITDAR or gross assets,
respectively, as reflected in the issuers most recent consolidated audited financial statements.
Put
Bondholder put at par if there is a change of control (CoC) and within the CoC period (within 90 days of the
announcement) the issuer is unable to acquire and maintain an IG rating (poison put). CoC is defined as any interest
in more than 50% of voting rights. The relevant rating agencies are S&P, Moodys and Fitch.
Covenants
None
Other
Events of default include cross default of issuer/guarantor/any material subsidiary on indebtedness, subject to a
carve-out of GBP50m equivalent. The coupon steps up by 125bp if the notes have not been rated by at least two
rating agencies before the first interest payment date.
Source: Company data, HSBC

274

European Credit Research


Corporate Bond Covenants
September 2010

abc

Personal &
Household goods

275

abc

European Credit Research


Corporate Bond Covenants
September 2010

Fortune Brands
Bond
Coupon

Maturity

Issuer

4%

30 Jan 2013 Fortune Brands Inc

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers: (a) secured debt of the issuer and restricted subsidiaries; and (b) long-term debt (ie original
maturity of more than one year) of restricted subsidiaries. Restricted subsidiaries include domestic subsidiaries that
are not primarily involved in business related to finance, insurance, real estate, energy or transportation. There are
several carve-outs in the clause; for example, restrictions on part (a) exclude mortgages that exist at the time of or
are linked to a merger/acquisition of a corporation; and (b) exclude debt owed to the issuer or another restricted
subsidiary. Please see the prospectus for further details.
Put
None
Covenants
The notes include restrictions on: (a) sale and leaseback transactions of major facilities, by the issuer or any
restricted subsidiary, for periods exceeding five years unless fair value is received for the sale, and the net proceeds
are used to pay down debt which is senior to the notes; and (b) transfers of property, by the issuer or any restricted
subsidiary, to any non-restricted subsidiary. There are also limitations on mergers, which specify that should the
issuer merge/consolidate with/into another corporation or sell substantially all of its assets to another corporation,
then the successor corporation shall be substituted as obligor under the notes.
Other
No cross default
Source: Company data, HSBC

276

abc

European Credit Research


Corporate Bond Covenants
September 2010

Henkel
Bond
Coupon

Maturity

4.25%
4.625%

Issuer

Guarantor

Out amt

Type

10 Jun 2013 Henkel AG & Co


KGaA

None

EUR1000m

Senior unsecured

19 Mar 2014 Henkel AG & Co


KGaA

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers capital market indebtedness of the issuer. Capital market indebtedness includes bonds,
notes or other securities that are or are capable of being quoted, listed, dealt or traded on any stock exchange or
recognised securities market.
Put
None
Covenants
None
Other
Events of default include default on capital market indebtedness of the issuer, subject to a carve-out of EUR25m.
Source: Company data, HSBC

277

abc

European Credit Research


Corporate Bond Covenants
September 2010

Liz Claiborne
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5%

08 Jul 2013

Liz Claiborne Inc

None

EUR350m

Senior unsecured

Call
Make-whole call at higher of par and 0.15% + (gross redemption yield of such European government bond whose
maturity is closest to the maturity of the notes). Also callable for taxation reasons.
Negative pledge
Negative pledge covers indebtedness of the issuer and any wholly owned domestic subsidiary, but is subject to a number
of carve-outs. The pledge excludes letters of credit, debt pledged on property or assets to-be-acquired and related
refinancing, debt up to USD250m on fixed or capital assets that are acquired or constructed and related refinancing, and
any existing debt that existed as at 5 July 2006 up to USD1,100m. There is also a general carve-out of USD250m.
Put
Bondholder put at par after a put event. Put event occurs when there is a change of control (CoC) of 50% of voting
rights and as a result, either: (A) the bonds are downgraded by S&P and/or Moodys and/or Fitch from an investment
grade rating to a non-investment grade rating; (B) the bonds already carry a non-investment grade rating and are
downgraded by S&P and/or Moodys and/or Fitch by at least one further notch; or (C) the bonds carry no rating and
no investment grade rating is assigned by S&P and/or Moodys and/or Fitch. The rating action must occur within the
CoC period, which starts from the earlier of the first public CoC announcement and first relevant potential CoC
announcement, and ends 90 days after the CoC (the period is extended by a maximum of 60 days if the rating is
placed under review within the CoC period and remain so 90 days after the CoC).
Covenants
None
Other
Events of default include default of the issuer and any wholly-owned domestic subsidiary, subject to a carve-out of
USD100m.
Source: Company data, HSBC

278

abc

European Credit Research


Corporate Bond Covenants
September 2010

Polo Ralph Lauren


Bond
Coupon

Maturity

Issuer

4.5%

04 Oct 2013 Polo Ralph Lauren


Corporation

Guarantor

Out amt

Type

None

EUR209.196m Senior unsecured

Call
Make-whole call reference Bunds 3.75% July 2013. Also callable for taxation reasons.
Negative pledge
Negative pledge covers debt of the issuer or any subsidiary, subject to a carve-out equivalent to 10% of consolidated
net assets of the issuer, as calculated in the latest consolidated balance sheet (under US GAAP). Debt includes
bonds, notes, debentures or other debt securities. The carve-out is applicable to debt plus the present value of rental
payments in respect of sale and leaseback transactions. Sale and leaseback transactions of offices and facilities by
the issuer or any subsidiary are prohibited, unless: (a) the property can be secured within the negative pledge but
without equally securing the notes; (b) the transaction takes place between the issuer and subsidiaries; or (c) the
lease term is less than three years.
Put
Bondholder put at par after a put event. A put event occurs when there is a change of control (CoC) of 50% of voting
rights and as a result, either: (A) the bonds are downgraded by S&P and/or Moodys and/or Fitch from an investment
grade rating to a non-investment grade rating; (B) the bonds already carry a non-investment grade rating and are
downgraded by S&P and/or Moodys and/or Fitch by at least one further notch; or (C) the bonds carry no rating and
no investment grade rating is assigned by S&P and/or Moodys and/or Fitch. The rating action must occur within the
CoC period, which starts from the earlier of the first public CoC announcement and first relevant potential CoC
announcement, and ends 90 days after the CoC (the period is extended by a maximum of 60 days if the rating is
placed under review within the CoC period and remain so 90 days after the CoC).
Covenants
None
Other
Events of default include default of the issuer, subject to a carve-out of USD100m.
Source: Company data, HSBC

279

abc

European Credit Research


Corporate Bond Covenants
September 2010

Procter & Gamble


Bond
Coupon

Maturity

3.375%

Issuer

Guarantor

Out amt

Type

07 Dec 2012 Procter & Gamble Co None

EUR1400m

Senior unsecured

4.5%

12 May 2014 Procter & Gamble Co None

EUR1500m

Senior unsecured

4.125%

07 Dec 2020 Procter & Gamble Co None

EUR600m

Senior unsecured

6.25%

31 Jan 2030 Procter & Gamble Co None

GBP500m

Senior unsecured

5.25%

19 Jan 2033 Procter & Gamble Co None

GBP200m

Senior unsecured

Call
For 2030 bond: Spens call reference UKT 6% 2028. For 2033 bond: Spens call reference UKT 4.25% 2032. All
others non-callable except for taxation reasons.
Negative pledge
Negative pledge covers debt of the issuer or any domestic subsidiary, subject to a carve-out equivalent to 5% of
consolidated net tangible assets of the issuer, as calculated in the latest consolidated balance sheet (under US
GAAP). Debt includes bonds, notes, debentures or other similar indebtedness that is secured by a mortgage on
property or shares of a domestic subsidiary. A domestic subsidiary is a subsidiary that has a substantial portion of
business or fixed assets in the US. The carve-out is applicable to debt plus the present value of rental payments in
respect of sale and leaseback transactions (using a discount rate of 10% pa). Sale and leaseback transactions of
offices and facilities by the issuer or any domestic subsidiary are prohibited, unless: (a) the property can be secured
within the negative pledge but without equally securing the notes; (b) the transaction takes place between the issuer
and domestic subsidiaries; or (c) the lease term is less than three years.
Put
None
Covenants
None
Other
Events of default include default of the issuer. There is no carve-out mentioned.
Source: Company data, HSBC

280

abc

European Credit Research


Corporate Bond Covenants
September 2010

Unilever
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

14 Nov 2012 Unilever NV

Unilever NV, Unilever


US Inc

EUR750m

Senior unsecured

4.875%

21 May 2013 Unilever NV

Unilever NV, Unilever


US Inc

EUR750m

Senior unsecured

4%

19 Dec 2014 Unilever plc

Unilever NV, Unilever


US Inc

GBP350m

Senior unsecured

3.375%

29 Sep 2015 Unilever NV

Unilever Plc

EUR750m

Senior unsecured

4.75%

16 Jun 2017 Unilever plc & NV

Unilever NV, Unilever


US Inc

GBP400m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers indebtedness of the issuer/guarantor subject to a carve-out amount limited to 25% of the
aggregate value of the fixed assets and current assets of the issuer/guarantor and group companies (by reference to
the most recently published audited consolidated balance sheet of the Unilever Group). Indebtedness is defined as
any loan or other debt represented by bonds, notes, debentures, or other quoted securities with maturities of more
than one year. The negative pledge clause does not apply to liens arising solely by mandatory operation of law and
to any security over assets arising pursuant to the general terms and conditions of the Dutch Bankers Association
and/or similar terms applied by financial institutions.
Put
None
Covenants
None
Other
Events of default include cross default of issuer/guarantor on indebtedness in excess of USD100m
Source: Company data, HSBC

281

European Credit Research


Corporate Bond Covenants
September 2010

282

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Retail

283

abc

European Credit Research


Corporate Bond Covenants
September 2010

Adidas
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.75%

14 Jul 2014

Adidas International
Finance BV

Adidas AG

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers capital market indebtedness only
Put
None
Covenants
None
Other
Events of default include cross default of issuer/guarantor on indebtedness in excess of EUR20m
Source: Company data, HSBC

284

abc

European Credit Research


Corporate Bond Covenants
September 2010

Auchan
Bond
Coupon

Maturity

Issuer

4.125%

04 May 2011 Groupe Auchan SA

Guarantor

Out amt

Type

None

EUR300m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its principal subsidiaries excluding permitted
security interest. Relevant indebtedness includes bonds, notes, listed debt, excluding any bank loans. Permitted
security interest means security interest granted over an asset to finance its purchase. A principal subsidiary is
defined as a subsidiary of: (i) Auchan, representing at least 10% of consolidated net assets or net sales in the latest
audited consolidated accounts; or (ii) Banque Accord, representing at least 10% of consolidated net assets or
operating income in the latest audited consolidated accounts; or (iii) a subsidiary to which all of the assets of a
principal subsidiary are transferred.
Put
None
Covenants
None
Other
Events of default include default of the issuer and principal subsidiaries subject to a EUR15m carve-out.
Source: Company data, HSBC

285

abc

European Credit Research


Corporate Bond Covenants
September 2010

Auchan
Bond
Coupon

Maturity

4.75%
6%

Issuer

Guarantor

Out amt

Type

15 Apr 2015 Groupe Auchan SA

None

EUR500m

Senior unsecured

15 Apr 2019 Groupe Auchan SA

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its principal subsidiaries excluding permitted
security interest. Relevant indebtedness includes bonds, notes, listed debt, excluding any bank loans. Permitted
security interest means security interest granted over an asset to finance its purchase. A principal subsidiary is
defined as a subsidiary of: (i) Auchan, representing at least 10% of consolidated net assets or net sales in the latest
audited consolidated accounts; or (ii) Banque Accord, representing at least 10% of consolidated net assets or
operating income in the latest audited consolidated accounts; or (iii) a subsidiary to which all of the assets of a
principal subsidiary are transferred.
Put
None
Covenants
None
Other
Events of default include cross default of the issuer and principal subsidiaries on obligations subject to a EUR75m
carve-out.
Source: Company data, HSBC

286

abc

European Credit Research


Corporate Bond Covenants
September 2010

Auchan
Bond
Coupon

Maturity

Issuer

29 Apr 2013 Groupe Auchan SA


5%
Step up
(see Other)

Guarantor

Out amt

Type

None

EUR800m

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its principal subsidiaries excluding permitted
security interest. Relevant indebtedness includes bonds, notes, listed debt, excluding any bank loans. Permitted
security interest means security interest granted over an asset to finance its purchase. A principal subsidiary is
defined as a subsidiary of: (i) Auchan, representing at least 10% of consolidated net assets or net sales in the latest
audited consolidated accounts; or (ii) Banque Accord, representing at least 10% of consolidated net assets or
operating income in the latest audited consolidated accounts; or (iii) a subsidiary to which all of the assets of a
principal subsidiary are transferred.
Put
None
Covenants
None
Other
Events of default include default of the issuer and principal subsidiaries subject to a EUR75m carve-out. If a rating
downgrade to BB+ by S&P occurs at any time during the 90 days following the annual notification and such
downgrade is related to the CoC that has occurred, the coupon steps up by 125bps. The coupon steps up by a
further 25bp per one-notch downgrade up to (and including) B-, where the maximum step up would be 250bp. CoC
occurs where the Association Familiale Mulliez and/or entities owned by any of its members cease to hold at least
50.1% of the total voting rights or issued share capital. A rating downgrade means: 1) a rating withdrawal; 2) a
downgrade from IG to non-IG; or 3) a one-notch downgrade from any non-IG rating. The CoC period begins on the
date of the first public announcement of the CoC, ending 90 days thereafter, or commencing 180 days prior to the
date of the first public announcement and ending on the date of the announcement. The issuer has a clean-up call if
80% or more of the bonds have been tendered following the activation of the clause.
Source: Company data, HSBC

287

abc

European Credit Research


Corporate Bond Covenants
September 2010

Carrefour
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

15 Jun 2011 Carrefour SA

None

EUR1400m

Senior unsecured

5.375%

19 Dec 2012 Carrefour SA

None

GBP500m

Senior unsecured

3.625%

06 May 2013 Carrefour SA

None

EUR750m

Senior unsecured

6.625%

02 Dec 2013 Carrefour SA

None

EUR700m

Senior unsecured

5.375%

12 Jun 2015 Carrefour SA

None

EUR1000m

Senior unsecured

4.375%

02 Nov 2016 Carrefour SA

None

EUR600m

Senior unsecured

4%

09 Apr 2020 Carrefour SA

None

EUR1000m

Senior unsecured

3.875%
25 Apr 2021 Carrefour SA
Step Up
(see Other)

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers all indebtedness of the issuer and principal subsidiaries, excluding permitted encumbrances
subject to a carve-out corresponding to the higher of EUR200m or 6% of the issuers consolidated equity.
Encumbrances are defined as liens or pledges or any encumbrances: (i) existing at the issue date; (ii) arising or
created in the ordinary course of business as a site developer or by operation of law; (iii) over assets acquired by the
issuer or a principal subsidiary and their refinancing; (iv) created over a newly acquired asset in the limit of the
acquisition cost. A principal subsidiary is a subsidiary accounting for at least 15% of consolidated turnover or total
assets in the latest audited accounts.
Put
None
Covenants
None
Other
Events of default include default of the issuer and principal subsidiaries subject to a EUR100m carve-out.
Source: Company data, HSBC

288

abc

European Credit Research


Corporate Bond Covenants
September 2010

Casino Guichard-Perrachon
Bond
Coupon

Maturity

Issuer

6%

27 Feb 2012 Casino GuichardPerrachon SA

Guarantor

Out amt

Type

None

EUR595m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and principal subsidiaries. Relevant indebtedness is
defined as bonds, notes, other listed debt or debt traded over the counter. A principal subsidiary is a subsidiary
accounting for at least 10% of the consolidated assets or consolidated operating income of the Issuer in the latest
audited accounts or a subsidiary to which all of the assets of a principal subsidiary are transferred.
Put
None
Covenants
None
Other
Events of default include default of the issuer and principal subsidiaries subject to a EUR15m carve-out.
Source: Company data, HSBC

289

abc

European Credit Research


Corporate Bond Covenants
September 2010

Casino Guichard-Perrachon
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

04 Apr 2013 Casino Guichard6.375%


Perrachon SA
Step up
(see Other)

None

EUR718m

Senior unsecured

5.5%
30 Jan 2015 Casino GuichardPerrachon SA
Step up
(see Other)

None

EUR750m

Senior unsecured

4.379%
08 Feb 2017 Casino GuichardStep up
Perrachon SA
(see Other)

None

EUR888m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and principal subsidiaries. Relevant indebtedness
means any indebtedness for borrowed money represented by notes or other securities which are for the time being,
or are capable of being, quoted, listed and admitted to trading or ordinarily dealt in on any stock exchange, OTC
market or other securities market. Principal subsidiaries mean any subsidiary accounting for at least 10% of the
consolidated assets or turnover of the issuer.
Put
Put at par in the event of a change of control (acquisition of >50% of the voting rights other than a permitted holding
company controlled by Rallye SA) resulting in a rating downgrade to non-investment grade (or a one-notch
downgrade if the ratings are already non-investment grade) within the change of control period (180 days after the
announcement of the change of control)
Covenants
None
Other
Events of default include default of the issuer and principal subsidiaries subject to a EUR25m carve-out. The coupon
steps up by 125bp if S&P or Fitch downgrade the ratings below investment grade, steps down by 125bp if S&P or
Fitch upgrade the ratings to investment grade (and two ratings are investment grade) or in the event of the
occurrence of an alternative agency compensation event (defined as the publication of a BBB or higher rating by one
rating agency while the other rating agency has withdrawn its ratings).
Source: Company data, HSBC

290

abc

European Credit Research


Corporate Bond Covenants
September 2010

DSGi
Bond
Coupon

Maturity

Issuer

Guarantor

6.125%

15 Nov 2012 DSG International Plc DSG Retail Ltd

Out amt

Type

GBP160m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, the guarantor and their subsidiaries. Relevant
indebtedness is defined as bonds, notes and other listed debt. The definition excludes debt with an initial maturity of
less than one year.
Put
If a restructuring event occurs and a negative rating event or a rating downgrade happens as a result, the bonds
become puttable at a price equal to the nominal amount multiplied by the RPI ratio. A restructuring event is defined
as a change of control on 50% or more of the outstanding capital or voting rights of the issuer or the guarantor. A
negative rating event is defined as the failure by the issuer to seek a rating or to obtain an investment grade rating
for its senior unsecured debt with an initial five-year maturity within 14 days of the occurrence of a restructuring
event. A rating downgrade means a rating withdrawal or a downgrade to below investment grade or a rating
downgrade by one notch if the issuers rating is already non-investment grade by either Moodys and S&P within 90
days following the public announcement of the restructuring event or the resolution of a credit watch situation,
whichever is longer.
Covenants
None
Other
Events of default include default of the Issuer, guarantor and principal subsidiaries subject to a GBP20m carve-out. A
principal subsidiary is defined as: (i) a subsidiary accounting for at least 15% of consolidated profits before tax and
extraordinary and exceptional items in the latest published audited accounts; or (ii) a subsidiary with total gross tangible
assets of GBP100m and more by reference to the latest accounts; or (iii) a subsidiary to which the whole of the assets
of a principal subsidiary are transferred. A certificate signed by two directors of the issuer, stating that a subsidiary is or
is not a principal subsidiary is binding on all parties provided that the certificate is relied on by the trustee.
Source: Company data, HSBC

291

abc

European Credit Research


Corporate Bond Covenants
September 2010

John Lewis
Bond
Coupon

Maturity

Issuer

6.375%

30 Jan 2012 John Lewis Plc

Guarantor

Out amt

Type

None

GBP142m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the external indebtedness of the company and its subsidiaries. External indebtedness is
defined as listed debt with a maturity of more than one year. The definition excludes listed loan stock denominated in
sterling offered primarily to investors in the UK.
Put
None
Covenants
(i) All monies borrowed shall not exceed 1.75 times the adjusted capital and reserves; (ii) the aggregate principal
amount of all monies borrowed and secured by any charge and all monies borrowed by subsidiaries shall not exceed
0.5 times the adjusted capital and reserves. The definition of moneys borrowed excludes moneys borrowed of a
company which becomes a subsidiary after 20 April 2001 as well as moneys borrowed by partly owned subsidiaries.
Other
Events of default include default of the company and principal subsidiaries subject to a GBP10m carve-out and cover
material adverse change. In addition, it is an event of default if the company or any principal subsidiary ceases to be
a subsidiary of the John Lewis Partnership for any reason not approved in writing by the trustee. A principal
subsidiary is defined as: (i) a subsidiary accounting for at least 10% of consolidated total assets or consolidated
gross revenues in the latest audited accounts; or (ii) a subsidiary to which the whole of the assets of a principal
subsidiary are transferred. A report by the auditors that, in their opinion, a subsidiary is or is not a principal subsidiary
is binding on all parties.
Source: Company data, HSBC

292

abc

European Credit Research


Corporate Bond Covenants
September 2010

John Lewis
Bond
Coupon

Maturity

Issuer

10.5%

23 Jan 2014 John Lewis Plc

Guarantor

Out amt

Type

None

GBP100m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the external indebtedness of the company and its subsidiaries. External indebtedness is
defined as listed debt denominated in any currency other than sterling or denominated in sterling if less than 50% of
the outstanding amount was offered for subscription to investors in the UK.
Put
None
Covenants
(i) All monies borrowed shall not exceed 1.75 times the adjusted capital and reserves; (ii) the aggregate principal
amount of all monies borrowed and secured by any charge and all monies borrowed by subsidiaries shall not exceed
0.5 times the adjusted capital and reserves. The definition of moneys borrowed excludes moneys borrowed of a
company which becomes a subsidiary after 6 February 1989 as well as moneys borrowed by partly owned
subsidiaries.
Other
Events of default include default of the company and principal subsidiaries subject to a GBP5m carve-out and cover
material adverse change. In addition, it is an event of default if the company or any principal subsidiary ceases to be
a subsidiary of the John Lewis Partnership for any reason not approved in writing by the trustee. A principal
subsidiary is defined as: (i) a subsidiary accounting for at least 10% of consolidated total assets or consolidated
gross revenues in the latest audited accounts; or (ii) a subsidiary to which the whole of the assets of a principal
subsidiary are transferred. A report by the auditors that, in their opinion, a subsidiary is or is not a principal subsidiary
is binding on all parties.
Source: Company data, HSBC

293

abc

European Credit Research


Corporate Bond Covenants
September 2010

John Lewis
Bond
Coupon

Maturity

Issuer

6.125%

21 Jan 2025 John Lewis Plc

Guarantor

Out amt

Type

None

GBP300m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its subsidiaries. Relevant indebtedness is
represented by bonds, notes or other similar securities with maturities over one year.
Put
None
Covenants
(i) All monies borrowed shall not exceed 1.75 times the adjusted capital and reserves; (ii) the aggregate principal
amount of all monies borrowed and secured by any charge and all monies borrowed by subsidiaries shall not exceed
0.5 times the adjusted capital and reserves. The definition of moneys borrowed excludes moneys borrowed of a
company which becomes a subsidiary after 19th July 2010 as well as moneys borrowed by partly owned
subsidiaries.
Other
Events of default include default of the company and principal subsidiaries subject to a GBP10m carve-out and
covers material adverse change. In addition, it is an event of default if the company or any principal subsidiary
ceases to be a subsidiary of the John Lewis Partnership for any reason not approved in writing by the trustee. A
principal subsidiary is defined as: (i) a subsidiary accounting for at least 10% of consolidated total assets or
consolidated gross revenues in the latest audited accounts; or (ii) a subsidiary to which the whole of the assets of a
principal subsidiary are transferred. A report by the auditors that in their opinion a subsidiary is or is not a Principal
Subsidiary is binding on all parties.
Source: Company data, HSBC

294

abc

European Credit Research


Corporate Bond Covenants
September 2010

Kingfisher
Bond
Coupon

Maturity

4.5%
5.625%

Issuer

Guarantor

Out amt

Type

21 Oct 2010 Kingfisher Plc

None

EUR449m

Senior unsecured

15 Dec 2014 Kingfisher Plc

None

GBP250m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer only. Relevant indebtedness is defined as bonds,
notes or other listed securities trade on an exchange or over the counter. The definition excludes listed loans offered
to investors resident in the UK or denominated in sterling as well as debt maturing within one year
Put
None
Covenants
None
Other
Events of default include default of the issuer or any principal subsidiary subject to a carve-out equal to the higher of
1% of capital and reserves and GBP25m by reference to the latest audited accounts. A principal subsidiary is
defined as a subsidiary accounting for at least 15% of consolidated tangible net worth or operating profit, excluding
profit/loss from the sale of properties in the latest audited accounts.
Source: Company data, HSBC

295

abc

European Credit Research


Corporate Bond Covenants
September 2010

LVMH
Bond
Coupon

Maturity

Issuer

4.625%

01 Jul 2011

Guarantor

Out amt

Type

LVMH Moet Hennessy None


Louis Vuitton

EUR600m

Senior unsecured

3.375%

22 Jun 2012 LVMH Moet Hennessy None


Louis Vuitton

EUR760m

Senior unsecured

4.375%

12 May 2014 LVMH Moet Hennessy None


Louis Vuitton SA

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant debt of the issuer. Relevant debt includes bonds, notes or debentures that are, or
are capable of being, quoted, listed or ordinarily dealt in on any stock exchange.
Put
None
Covenants
None
Other
Events of default include default of the Issuer, subject to a carve-out of EUR50m.
Source: Company data, HSBC

296

abc

European Credit Research


Corporate Bond Covenants
September 2010

Marks & Spencer


Bond
Coupon

Maturity

6.375%

Issuer

Guarantor

Out amt

Type

07 Nov 2011 Marks & Spencer Plc None

GBP308m

Senior unsecured

5.875%

29 May 2012 Marks & Spencer Plc None

GBP267m

Senior Unsecured

5.625%

24 Mar 2014 Marks & Spencer Plc None

GBP400m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its subsidiaries. Relevant indebtedness is
defined as bonds, notes or other securities listed on an exchange initially and primarily offered outside of the country
in the currency of which this debt is denominated.
Put
Only applies to 2012 bonds: Bondholder put at par if there is a change of control (CoC) and this is followed by: (i)
rating downgrade from IG to non-IG; (ii) withdrawal of ratings; or (iii) failure to obtain an IG rating (if not rated), within
the CoC period. CoC is defined as a person directly or indirectly acquiring shares representing more than 50% of the
issuers share capital or voting rights. The CoC period is the period commencing from the public announcement of
the CoC and up to 90 days after, or longer if the ratings are under review, provided that the review was initiated
within 90 days of the CoC.
Covenants
None
Other
Events of default include default of the issuer subject to a GBP20m carve-out. There is no reference to subsidiaries.
Source: Company data, HSBC

297

abc

European Credit Research


Corporate Bond Covenants
September 2010

Marks & Spencer


Bond
Coupon

Maturity

Issuer

Guarantor

02 Dec 2019 Marks & Spencer plc None


6.125%
Step up
(see Other)

Out amt

Type

GBP400m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its subsidiaries. Relevant indebtedness is
defined as bonds, notes or other securities listed on an exchange initially and primarily offered outside of the country
in the currency of which this debt is denominated.
Put
Bondholder put at par if there is a change of control (CoC) and this is followed by: (i) rating downgrade from IG to
non-IG; (ii) withdrawal of ratings; or (iii) failure to obtain an IG rating (if not rated), within the CoC period. CoC is
defined as person directly or indirectly acquiring shares representing more than 50% of the issuers share capital or
voting rights. The CoC period is the period commencing from the public announcement of the CoC and up to 90 days
after, or longer if the ratings are under review, provided that the review was initiated within 90 days of the CoC.
Covenants
None
Other
Events of default include default of the issuer subject to a GBP20m carve-out. There is no reference to subsidiaries.
The coupon steps up by 125bp in the case of a rating downgrade to non-investment grade or is withdrawn by
Moodys and/or S&P. Subsequently, the coupon steps down by 125bp in the event that none of the rating agencies
give a rating below investment grade.
Source: Company data, HSBC

298

abc

European Credit Research


Corporate Bond Covenants
September 2010

Marks & Spencer


Bond
Coupon

Maturity

Issuer

Guarantor

6.875%

13 Dec 2037 Marks & Spencer plc None

Out amt

Type

GBP250m

Senior unsecured

Call
Spens call, tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its subsidiaries. Relevant indebtedness is
defined as bonds, notes or other securities listed on an exchange initially and primarily offered outside of the country
in the currency of which this debt is denominated.
Put
Bondholder put at par if there is a change of control (CoC) and this is followed by: (i) rating downgrade from IG to
non-IG; (ii) withdrawal of ratings; or (iii) failure to obtain an IG rating (if not rated) by S&P, Moodys or Fitch, within
the CoC period. Control is defined as a person (other than an entity with similar shareholders to the issuer) directly or
indirectly acquiring shares representing more than 50% of the issuers share capital or voting rights. The CoC period
is the period commencing from the public announcement of the CoC and up to 90 days after, or longer if the ratings
are under review, provided that the review was initiated within 90 days of the CoC. The issuer has a clean-up call if
80% or more of the bonds have been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer and subsidiaries on relevant indebtedness subject to a GBP20m
carve-out.
Source: Company data, HSBC

299

abc

European Credit Research


Corporate Bond Covenants
September 2010

Metro
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

26 May 2011 Metro Finance BV

Metro AG

EUR750m

Senior unsecured

3.625%

24 Jun 2011 Metro AG

None

EUR350m

Senior unsecured
under the companys
EUR5bn EMTN
programme

4.75%

29 May 2012 Metro AG

None

EUR500m

Senior unsecured

9.375%

28 Nov 2013 Metro Finance BV

Metro AG

EUR500m

Senior unsecured

5.75%

14 Jul 2014

Metro AG

None

EUR600m

Senior unsecured
under the companys
EUR5bn EMTN
programme

7.625%

05 Mar 2015 Metro AG

None

EUR1000m

Senior unsecured

4.25%

22 Feb 2017 Metro AG

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the indebtedness of the issuer and its subsidiaries excluding permitted security interest.
Indebtedness includes listed debt as well as bank loans. Permitted security interest includes security interest existing
at the time of issuance or arising in the ordinary course of business or used to finance the acquisition of new assets.
A subsidiary is a company consolidated or controlled by the issuer with total assets accounting for at least 3% of
consolidated assets or revenues in the most recent audited financial statements. For bonds where the issuer is
Metro Finance BV, the negative pledge covers the guarantor as well.
Put
None
Covenants
None
Other
Events of default include default of the issuer or any subsidiary. For bonds where the issuer is Metro Finance BV, the
cross default includes the guarantor as well.
Source: Company data, HSBC

300

abc

European Credit Research


Corporate Bond Covenants
September 2010

Next
Bond
Coupon

Maturity

5.25%
5.875%

Issuer

Guarantor

Out amt

Type

30 Sep 2013 Next Plc

None

GBP254m

Senior unsecured

12 Oct 2016 Next Plc

None

GBP250m

Senior unsecured

Call
Clean-up call - if 80% or more of outstanding bonds are redeemed following a put event, the issuer may redeem all
remaining bonds at par. Also callable for taxation reasons.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer or any subsidiary. Relevant indebtedness includes
notes, bonds, debentures, debenture stock, loan stock or other securities that are, or are capable of being, quoted,
listed or ordinarily dealt in on any stock exchange, over-the-counter or other securities market. The pledge excludes
any debt pledged on any company which becomes a subsidiary after 30 May 2003 (for 2013 bond), 6 October 2006
(for 2016 bond) or after and its refinancing, where the debt is created before but not in contemplation of the company
becoming a subsidiary. There is also a general carve-out of GBP100m.
Put
Bondholder put at par after a put event. Put event occurs when there is a change of control and as a result, either:
(A) the bonds are downgraded by S&P and/or Moodys from an investment grade rating to a non-investment grade
rating within 120 days; (B) the bonds already carry a non-investment grade rating and are downgraded by S&P
and/or Moodys by at least one further notch within 120 days; or (C) the bonds carry no rating and no investment
grade rating is assigned by S&P and/or Moodys within 90 days.
Covenants
None
Other
Events of default include default of the issuer and principal subsidiaries, subject to a carve-out of GBP15m. A
principal subsidiary is a subsidiary whose turnover or total assets represent at least 5% of the consolidated turnover
or consolidated total assets, as calculated in the latest audited accounts.
Source: Company data, HSBC

301

abc

European Credit Research


Corporate Bond Covenants
September 2010

PPR
Bond
Coupon

Maturity

5.25%
4%

Issuer

Guarantor

Out amt

Type

29 Mar 2011 PPR SA

None

EUR800m

Senior unsecured

29 Jan 2013 PPR SA

None

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer only. Relevant indebtedness is defined as bonds,
notes or other listed securities trade on a regulated stock exchange.
Put
None
Covenants
None
Other
Events of default include default of the issuer or any material subsidiary subject to a carve-out of EUR50m.
Source: Company data, HSBC

302

abc

European Credit Research


Corporate Bond Covenants
September 2010

PPR
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

03 Apr 2014 PPR SA


8.625%
Step up
(see Other)

None

EUR800m

Senior unsecured

3.75%
08 Apr 2015 PPR SA
Step up
(see Other)

None

EUR500m

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer. Relevant indebtedness is defined as bonds, notes or
other listed debt.
Put
Bondholder put at par after a change of control (CoC) of potential CoC and a rating downgrade within the CoC
period. Control means holding/acquisition, directly or indirectly, more than 50% of issuers voting rights. A rating
downgrade means: (i) a rating withdrawal by S&P; (ii) a downgrade from investment grade to non-investment grade
by S&P; or (iii) a one-notch downgrade from any non-investment grade rating by S&P. The CoC period begins on the
date of the first public announcement of the CoC and ends 90 days thereafter, or commences 120 days prior to the
date of the first public announcement and ends on the date of the announcement. Potential change of control means
any public announcement by the issuer, or any actual or potential bidder relating to any potential change of control.
The issuer has a clean-up call if 80% or more of the bonds have been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer or any material subsidiary subject to a carve-out of EUR50m.
The coupon steps up by 125bp in the event of a rating downgrade to non investment grade or if the rating is
withdrawn by S&P. Subsequently, the coupon steps down by 125bp in the event of a rating upgrade by S&P to at
least Baa3/BBB-.
Source: Company data, HSBC

303

abc

European Credit Research


Corporate Bond Covenants
September 2010

Safeway
Bond
Coupon

Maturity

6.5%

Issuer

Guarantor

Out amt

Type

05 Aug 2014 Safeway Plc

WM Morrison Plc

GBP150m

Senior unsecured

6%

10 Jan 2017 Safeway Plc

WM Morrison Plc

GBP200m

Senior unsecured

6.125%

17 Dec 2018 Safeway Plc

WM Morrison Plc

GBP200m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the obligations of the issuer and its subsidiaries but excludes security granted by companies
becoming subsidiaries after 24 July 2002 or after 14 December 1998 (for the 2018 bond) and the refinancing of such
debt. An obligation is defined as indebtedness represented by notes, bonds and debentures or other listed securities.
This definition excludes secured listed loans denominated in sterling and initially primarily distributed to investors in
the UK.
Put
None
Covenants
None
Other
Events of default include default of the issuer or any material subsidiary subject to a carve-out corresponding to the
higher of 1% of capital and reserves or GBP15m. A material subsidiary is a subsidiary accounting for at least 10% of
consolidated profit before tax and exceptional items or consolidated net assets in the latest audited accounts. A
report by the auditors that, in their opinion, a subsidiary is or is not material is binding on all parties.
Source: Company data, HSBC

304

abc

European Credit Research


Corporate Bond Covenants
September 2010

Tesco
Bond
Coupon

Maturity

6.625%
3.875%

Issuer

Guarantor

Out amt

Type

12 Oct 2010 Tesco Plc

None

GBP150m

Senior unsecured

24 Mar 2011 Tesco Plc *

None

EUR389m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the obligations of the issuer and its subsidiaries. An obligation is defined as indebtedness
represented by notes, bonds and debentures, which are listed at the request of the issuer or its subsidiaries. This
definition excludes secured listed loans denominated in sterling and initially primarily distributed to investors in the UK.
Put
None
Covenants
None
Other
Events of default include default of the issuer or any material subsidiary subject to a GBP5m carve-out (*GBP25m for
the 2011 bond). A material subsidiary is a subsidiary accounting for at least 10% or more of consolidated profit
before tax and extraordinary items or consolidated net assets in any of the three most recent audited accounts, or a
subsidiary which has outstanding debt managed by the same trustee. A report by the auditors that, in their opinion, a
subsidiary is or is not material is binding on all parties.
Source: Company data, HSBC

305

abc

European Credit Research


Corporate Bond Covenants
September 2010

Tesco
Bond
Coupon

Maturity

4%

Issuer

Guarantor

Out amt

Type

08 Sep 2016 Tesco Plc

None

GBP200m

Senior unsecured

3.322%

05 Nov 2025 Tesco Plc

None

GBP210m

Senior unsecured

1.982%

24 Mar 2036 Tesco Plc *

None

GBP196m

Senior unsecured

Call
Call at nominal amount multiplied by the RPI ratio plus the excess over the price at which the gross real rate of return
on the notes equals the gross real rate of return on the reference gilt. Call for indexation reasons. Reference gilts
are: for 2016 bond Index-linked Gilt 2.5% July 2016; for 2025 bond Index-linked Gilt 2.5% July 2024; for 2036
bond Index-linked Gilt 2.0% January 2035.
Negative pledge
Negative pledge covers the obligations of the issuer and its subsidiaries. An obligation is defined as indebtedness
represented by notes, bonds and debentures, which are listed at the request of the issuer or its subsidiaries. This
definition excludes secured listed loans denominated in sterling and initially primarily distributed to investors in the UK.
Put
If a restructuring event occurs and within 90 days of the announcement a negative rating event or a rating
downgrade happens as a result, the bonds become puttable at a price equal to the nominal amount multiplied by the
RPI ratio. A restructuring event is defined as a change of control on: (a) at least 50% of the outstanding capital; or (b)
a number of shares that represent more than 50% of the voting rights of the issuer. A negative rating event is defined
as the failure by the issuer to seek a rating or to obtain an investment grade rating. A rating downgrade means a
rating withdrawal or a downgrade to below investment grade by either Moodys, S&P or Fitch.
Covenants
None
Other
Events of default include default of the issuer or any material subsidiary subject to a GBP5m carve-out (*GBP25m for
the 2036 bond). a material subsidiary is a subsidiary accounting for at least 10% or more of consolidated profit
before tax and extraordinary items or consolidated net assets in any of the three most recent audited accounts, or a
subsidiary which has outstanding debt managed by the same trustee. A report by the auditors that, in their opinion, a
subsidiary is or is not material is binding on all parties.
Source: Company data, HSBC

306

abc

European Credit Research


Corporate Bond Covenants
September 2010

Tesco
Bond
Coupon

Maturity

5.5%

Issuer

Guarantor

Out amt

Type

13 Dec 2019 Tesco Plc

None

GBP350m

Senior unsecured

5%

24 Mar 2023 Tesco Plc *

None

GBP389m

Senior unsecured

6%

14 Dec 2029 Tesco Plc

None

GBP200m

Senior unsecured

5.5%

13 Jan 2033 Tesco Plc

None

GBP200m

Senior unsecured

4.875%

24 Mar 2042 Tesco Plc *

None

GBP226m

Senior unsecured

5.125%

10 Apr 2047 Tesco Plc

None

EUR600m

Senior unsecured

5.2%

05 Mar 2057 Tesco Plc

None

GBP288m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the obligations of the issuer and its subsidiaries. An obligation is defined as indebtedness
represented by notes, bonds and debentures, which are listed at the request of the issuer or its subsidiaries. This
definition excludes secured listed loans denominated in sterling and initially primarily distributed to investors in the UK.
Put
If a restructuring event occurs and within 90 days of the announcement a negative rating event or a rating
downgrade happens as a result, the bonds become puttable at par plus accrued interest. A restructuring event is
defined as a change of control on: (a) at least 50% of the outstanding capital; or (b) a number of shares that
represent more than 50% of the voting rights of the issuer. A negative rating event is defined as the failure by the
issuer to seek a rating or to get an investment grade rating. A rating downgrade means a rating withdrawal or a
downgrade to below investment grade by either Moodys, S&P or Fitch.
Covenants
None
Other
Events of default include default of the issuer or any material subsidiary subject to a GBP5m carve-out (*GBP25m for
the 2023 and 2042 bonds). A material subsidiary is a subsidiary accounting for at least 10% or more of consolidated
profit before tax and extraordinary items or consolidated net assets in any of the three most recent audited accounts,
or a subsidiary which has outstanding debt managed by the same trustee. A report by the auditors that, in their
opinion, a subsidiary is or is not material is binding on all parties.
Source: Company data, HSBC

307

abc

European Credit Research


Corporate Bond Covenants
September 2010

Tesco
Bond
Coupon

Maturity

5.625%

Issuer

Guarantor

Out amt

Type

12 Sep 2012 Tesco plc

None

EUR1500m

Senior unsecured

5%

24 Feb 2014 Tesco plc

None

GBP600m

Senior unsecured

5.125%

24 Feb 2015 Tesco plc

None

EUR600m

Senior unsecured

5.875%

12 Sep 2016 Tesco plc

None

EUR1039m

Senior unsecured

6.125%

24 Feb 2022 Tesco plc

None

GBP900m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the obligations of the issuer and its subsidiaries. An obligation is defined as indebtedness
represented by notes, bonds and debentures, which are listed at the request of the issuer or its subsidiaries. This
definition excludes secured listed loans denominated in sterling and initially primarily distributed to investors in the UK.
Put
If a restructuring event occurs and within 90 days of the announcement a negative rating event or a rating
downgrade happens as a result, the bonds become puttable at par plus accrued interest. A restructuring event is
defined as a change of control on: (a) at least 50% of the outstanding capital; or (b) a number of shares that
represent more than 50% of the voting rights of the issuer. A negative rating event is defined as the failure by the
issuer to seek a rating or to get an investment grade rating. A rating downgrade means a rating withdrawal or a
downgrade to below investment grade by either Moodys, S&P or Fitch.
Covenants
None
Other
Events of default include cross default of the issuer or any material subsidiary subject to a GBP25m carve-out. A
material subsidiary is a subsidiary accounting for at least 10% or more of consolidated profit before tax and
extraordinary items or consolidated net assets in any of the three most recent audited accounts, or a subsidiary
which has outstanding debt managed by the same trustee. A report by the auditors that, in their opinion, a subsidiary
is or is not material is binding on all parties.
Source: Company data, HSBC

308

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wal-Mart
Bond
Coupon

Maturity

Issuer

4.75%

29 Jan 2013 Wal-Mart Stores Inc

Guarantor

Out amt

Type

None

GBP498m

Senior unsecured

Call
Spens call. Also callable for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include default of the issuer. There is no cross default. The documentation includes defeasance
language.
Source: Company data, HSBC

309

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wal-Mart
Bond
Coupon

Maturity

Issuer

5.75%

19 Dec 2030 Wal-Mart Stores Inc

Guarantor

Out amt

Type

None

GBP500m

Senior unsecured

Call
Spens call reference UKT 4.25% 2032. Also callable for taxation reasons.
Negative pledge
Negative pledge covers the issuer and its subsidiaries subject to a carve-out not exceeding the greater of 10% of the
companys consolidated net tangible assets (total consolidated assets current liabilities reserves for depreciation
intangible assets /+ adjustments on minority interests) or 15% of consolidated capitalisation (total consolidated
assets-current liabilities-deferred income taxes). The definition excludes mortgages on property acquired,
constructed or improved after 31 January 1991, as well as intra group security.
Put
None
Covenants
Restriction on sales and lease back transactions covers contracts of 48 months and longer. Sale-and-lease back
transactions are permitted if the proceeds from these contracts are at least equal to the sum of all costs incurred in
acquiring the property subject to the transaction.
Other
Events of default include default of the issuer. There is no cross default. The documentation includes defeasance
language.
Source: Company data, HSBC

310

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wal-Mart
Bond
Coupon

Maturity

Issuer

4.875%

19 Jan 2039 Wal-Mart Stores Inc

Guarantor

Out amt

Type

None

GBP1000m

Senior unsecured

Call
Spens call reference UKT 4.75% 2038. Also callable for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include default of the issuer. There is no cross default. The documentation includes defeasance
language.
Source: Company data, HSBC

311

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wal-Mart
Bond
Coupon

Maturity

4.875%
5.625%

Issuer

Guarantor

Out amt

Type

21 Sep 2029 Wal-Mart Stores Inc

None

EUR1000m

Senior unsecured

27 Mar 2034 Wal-Mart Stores Inc

None

GBP1000m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include default of the issuer. There is no cross default. The documentation includes defeasance
language.
Source: Company data, HSBC

312

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wal-Mart
Bond
Coupon

Maturity

Issuer

5.25%

28 Sep 2035 Wal-Mart Stores Inc

Guarantor

Out amt

Type

None

GBP1000m

Senior unsecured

Call
Spens call reference UKT 4.25% 2036. Also callable for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include default of the issuer. There is no cross default. The documentation includes defeasance
language.
Source: Company data, HSBC

313

European Credit Research


Corporate Bond Covenants
September 2010

314

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Tobacco

315

abc

European Credit Research


Corporate Bond Covenants
September 2010

BAT
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.375%

15 Jun 2011 BAT Holdings


EUR560m
BAT Plc, BAT Capital
(The Netherlands) BV Corporation, BAT
International Finance Plc

Senior unsecured

3.625%

29 Jun 2012 BAT International


Finance Plc

BAT Plc, BAT Capital


Corporation, BAT
Holdings
(The Netherlands) BV

EUR337m

Senior unsecured

5.125%

09 Jul 2013

BAT International
Finance Plc

BAT Plc, BAT Capital


Corporation, BAT
Holdings
(The Netherlands) BV

EUR519m

Senior unsecured

5.75%

09 Dec 2013 BAT International


Finance Plc

BAT Plc, BAT Capital


Corporation, BAT
Holdings (The
Netherlands) BV

GBP152m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers quoted borrowings of the issuer and the guarantors. Quoted borrowings cover bonds, notes,
debentures, loan stock or other quoted securities. The definition excludes loans as well as indebtedness
denominated in the currency of the country in which the issuer of the indebtedness has its principal place of business
except if more than 20% of the indebtedness is placed or offered for subscription outside of this country.
Put
None
Covenants
None
Other
Events of default include default of the issuer and any guarantor, subject to a carve-out of USD25m in each case and
USD100m in aggregate.
Source: Company data, HSBC

316

abc

European Credit Research


Corporate Bond Covenants
September 2010

BAT
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.375%

15 Sep 2014 BAT Holdings


BAT Plc, BAT Capital EUR600m
(The Netherlands) BV Corporation, BAT
International Finance Plc

Senior unsecured

5.875%

12 Mar 2015 BAT International


Finance plc

Senior unsecured

5.5%

15 Sep 2016 BAT Holdings


BAT Plc, BAT Capital GBP325m
(The Netherlands) BV Corporation, BAT
International Finance Plc

Senior unsecured

6.375%

12 Dec 2019 BAT International


Finance Plc

Senior unsecured

4%

07 Jul 2020

BAT plc, BAT Holdings EUR1250m


B.V.

BAT Plc, BAT Capital


Corporation, BAT
Holdings
(The Netherlands) BV

GBP500m

BAT Holdings
BAT Plc, BAT Capital EUR600m
(The Netherlands) BV Corporation, BAT
International Finance Plc

Type

Senior Unsecured
under the companys
USD16bn EMTN
programme

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers quoted borrowings of the issuer and the guarantors. Quoted borrowings cover bonds, notes,
debentures, loan stock or other quoted securities. The definition excludes loans as well as indebtedness
denominated in the currency of the country in which the issuer of the indebtedness has its principal place of
business, except if more than 20% of the indebtedness is placed or offered for subscription outside of this country.
Put
None
Covenants
None
Other
Events of default include default of the issuer and any guarantor subject to a carve-out of USD25m in each case and
USD100m in aggregate.
Source: Company data, HSBC

317

abc

European Credit Research


Corporate Bond Covenants
September 2010

BAT
Bond
Coupon

Maturity

Issuer

4.875%

24 Feb 2021 BAT International


Finance Plc

BAT plc, BAT Holdings GBP650m


BV, BAT Capital Corp

Senior unsecured
under the companys
USD16bn EMTN
programme

6%

29 Jun 2022 BAT International


Finance Plc

BAT plc, BAT Holdings GBP250m


BV, BAT Capital Corp

Senior unsecured
under the companys
USD16bn EMTN
programme

7.25%

12 Mar 2024 BAT International


Finance plc

BAT plc

Senior unsecured

6%

24 Nov 2034 BAT International


Finance Plc

BAT plc, BAT Holdings GBP500m


BV, BAT Capital Corp

Senior unsecured
under the companys
USD16bn EMTN
programme

5.75%

05 Jul 2040

BAT plc, BAT Holdings GBP275m


BV, BAT Capital Corp

Senior unsecured
under the companys
USD16bn EMTN
programme

BAT International
Finance Plc

Guarantor

Out amt

GBP500m

Type

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers quoted borrowings of the issuer and the guarantors. Quoted borrowings cover bonds, notes,
debentures, loan stock or other quoted securities. The definition excludes loans as well as indebtedness
denominated in the currency of the country in which the issuer of the indebtedness has its principal place of business
except if more than 20% of the indebtedness is placed or offered for subscription outside of this country.
Put
None
Covenants
None
Other
Events of default include default of the issuer and any guarantor subject to a carve-out of USD25m in each case and
USD100m in aggregate.
Source: Company data, HSBC

318

abc

European Credit Research


Corporate Bond Covenants
September 2010

Imperial Tobacco
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

25 Jun 2012 Imperial Tobacco


5%
Finance plc
Step up
(see Other)

Imperial Tobacco Group EUR1250m


plc

Senior unsecured

7.25%
15 Sep 2014 Imperial Tobacco
Step UP
Finance plc
(see Other)

Imperial Tobacco Group EUR750m


plc

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant debt of the issuer, the guarantor and consolidated subsidiaries. Relevant debt
includes bonds, notes, debentures, loan stock or other securities which are or are capable of being listed on any
stock exchange or over-the-counter market or other securities market.
Put
If a restructuring event occurs and, within 90 days of the earlier of: (i) the first public announcement; and (ii) a
potential restructuring event announcement (if any), a negative rating event or a rating downgrade happens as a
result, the bonds become puttable. A restructuring event is defined as a change of control, ie the acquisition/control
of more than 50% of the voting rights or share capital of the guarantor. A negative rating event is defined as the
failure by the issuer or guarantor to seek a rating or to obtain an investment grade rating either prior to or not later
than 21 days after the relevant restructuring event. A rating downgrade means a rating withdrawal or a downgrade to
below investment grade by either Moodys or S&P. The issuer has a clean-up call if 95% or more of the bonds have
been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer, the guarantor and principal subsidiaries on indebtedness,
subject to a carve-out of EUR50m. A principal subsidiary is a subsidiary representing more than 10% of consolidated
net assets or pre-tax profit of the group as shown in the most recent audited annual accounts. A certificate signed by
two directors of the guarantor that, in their opinion, a subsidiary of the guarantor is or is not a principal subsidiary is
conclusive and binding on the issuer, the guarantor and the noteholders. The coupon steps up by 125bp in the event
of a rating downgrade to non-investment grade or is withdrawn by Moodys and/or S&P. Subsequently, the coupon
steps down by 125bp in the event of a rating upgrade by both agencies to at least Baa3/BBB-.
Source: Company data, HSBC

319

abc

European Credit Research


Corporate Bond Covenants
September 2010

Imperial Tobacco
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

17 Feb 2016 Imperial Tobacco


8.375%
Finance plc
Step up
(see Other)

Imperial Tobacco Group EUR1500m


plc

Senior unsecured

7.75%
24 Jun 2019 Imperial Tobacco
Step up
Finance plc
(see Other)

Imperial Tobacco Group GBP500m


plc

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant debt of the issuer, the guarantor and consolidated subsidiaries. Relevant debt
includes bonds, notes, debentures, loan stock or other securities, which are or are capable of being listed on any
stock exchange or over-the-counter market or other securities market.
Put
If a restructuring event occurs and within 90 days of the earlier of: (i) the first public announcement; and (ii) potential
restructuring event announcement (if any) a negative rating event or a rating downgrade happens as a result, the
bonds become puttable. A restructuring event is defined as a change of control, ie the acquisition/control of more
than 50% of the voting rights or share capital of the guarantor. A negative rating event is defined as the failure by the
issuer or guarantor to seek a rating or to obtain an investment grade rating either prior to or not later than 21 days
after the relevant restructuring event. A rating downgrade means a rating withdrawal or a downgrade to below
investment grade by either Moodys or S&P. The issuer has a clean-up call if 95% or more of the bonds have been
tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer, the guarantor and principal subsidiaries on indebtedness,
subject to a carve-out of EUR50m. A principal subsidiary is a subsidiary representing more than 10% of consolidated
net assets or pre-tax profit of the group, as shown in the most recent audited annual accounts. A certificate signed by
two directors of the guarantor that in their opinion a subsidiary of the guarantor is or is not a principal subsidiary is
conclusive and binding on the issuer, the guarantor and the noteholders. The coupon steps up by 125bp in the event
of a rating downgrade to non-investment grade or is withdrawn by Moodys and/or S&P. Subsequently, the coupon
steps down by 125bp in the event of a rating upgrade by both agencies to at least Baa3/BBB-.
Source: Company data, HSBC

320

abc

European Credit Research


Corporate Bond Covenants
September 2010

Imperial Tobacco
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

17 Feb 2022 Imperial Tobacco


9%
Finance plc
Step up
(see Other)

Imperial Tobacco Group GBP1000m


plc

Senior unsecured

8.125%
15 Mar 2024 Imperial Tobacco
Step up
Finance plc
(see Other)

Imperial Tobacco Group GBP600m


plc

Senior unsecured

Call
Tax call and clean-up call (see put provision)
Negative pledge
Negative pledge covers the relevant debt of the issuer, the guarantor and consolidated subsidiaries. Relevant debt
includes bonds, notes, debentures, loan stock or other securities, which are, or are capable of being, listed on any
stock exchange or over-the-counter market or other securities market.
Put
If a restructuring event occurs and within 90 days of the earlier of: (i) the first public announcement; and (ii) a
potential restructuring event announcement (if any), a negative rating event or a rating downgrade happens as a
result, the bonds become puttable. A restructuring event is defined as a change of control, ie the acquisition/control
of more than 50% of the voting rights or share capital of the guarantor. A negative rating event is defined as the
failure by the issuer or guarantor to seek a rating or to obtain an investment grade rating either prior to or not later
than 21 days after the relevant restructuring event. A rating downgrade means a rating withdrawal or a downgrade to
below investment grade by either Moodys or S&P. The issuer has a clean-up call if 95% or more of the bonds have
been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer, the guarantor and principal subsidiaries on indebtedness,
subject to a carve-out of EUR50m. A principal subsidiary is a subsidiary representing more than 10% of consolidated
net assets or pre-tax profit of the group, as shown in the most recent audited annual accounts. A certificate signed by
two directors of the guarantor that, in their opinion, a subsidiary of the guarantor is or is not a principal subsidiary is
conclusive and binding on the issuer, the guarantor and the noteholders. The coupon steps up by 125bp in the event
of a rating downgrade to non-investment grade or is withdrawn by Moodys and/or S&P. Subsequently, the coupon
steps down by 125bp in the event of a rating upgrade by both agencies to at least Baa3/BBB-.
Source: Company data, HSBC

321

abc

European Credit Research


Corporate Bond Covenants
September 2010

Imperial Tobacco
Bond
Coupon

Maturity

Issuer

5.125%

02 Oct 2013 Altadis Finance BV

Guarantor

Out amt

Type

Altadis SA

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantor and subsidiaries, defined as companies
owned or controlled by the issuer or the guarantor. Relevant indebtedness covers bonds, notes, debentures, loan
stock or other quoted securities. The negative pledge definition excludes the Logista, Corporacion Habanos and
Altabana subsidiaries.
Put
None
Covenants
None
Other
Events of default include default of the issuer, the guarantor and principal subsidiaries, subject to a carve-out of
EUR30m. A principal subsidiary is defined as a subsidiary representing more than 10% of consolidated EBITDA or
10% of consolidated assets or sales, as shown in the most recent audited annual accounts. Altabana and
Corporacion Habanos are excluded from the definition.
Source: Company data, HSBC

322

abc

European Credit Research


Corporate Bond Covenants
September 2010

Imperial Tobacco
Bond
Coupon

Maturity

Issuer

4%

11 Dec 2015 Altadis Emisiones


Financieras SAU

Guarantor

Out amt

Type

Altadis SA

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantor and subsidiaries, defined as companies
owned or controlled by the issuer or the guarantor. Relevant indebtedness covers bonds, notes, debentures, loan
stock or other quoted securities. The negative pledge definition excludes the Logista, Corporacion Habanos,
Altabana, and Aldeasa subsidiaries.
Put
None
Covenants
None
Other
Events of default include default of the issuer, the guarantor and principal subsidiaries, subject to a carve-out of
EUR30m. A principal subsidiary is defined as a subsidiary representing more than 10% of consolidated EBITDA or
10% or consolidated assets or sales, as shown in the most recent audited annual accounts. Altabana and
Corporacion Habanos are excluded from the definition.
Source: Company data, HSBC

323

abc

European Credit Research


Corporate Bond Covenants
September 2010

Imperial Tobacco
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

13 Jun 2012 Imperial Tobacco


6.875%
Finance Plc
Step up
(see Other)

Imperial Tobacco Group GBP350m


Plc

Senior unsecured

4.375%
22 Nov 2013 Imperial Tobacco
Finance Plc
Step up
(see Other)

Imperial Tobacco Group EUR1200m


Plc

Senior unsecured

5.5%
22 Nov 2016 Imperial Tobacco
Finance Plc
Step up
(see Other)

Imperial Tobacco Group GBP450m


Plc

Senior unsecured

6.25%
04 Dec 2018 Imperial Tobacco
Step up
Finance Plc *
(see Other)

Imperial Tobacco Group GBP200m


Plc

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant debt of the issuer, the guarantor and consolidated subsidiaries, which includes
bonds, notes, debentures, loan stock or other securities, which are, or are capable of being, listed on any stock
exchange or over the counter.
Put
None
Covenants
None
Other
Events of default include default of the Issuer, the guarantor and principal subsidiaries, subject to a carve-out of
EUR35m or equivalent (*GBP20m for the 2012 and 2018 bonds). A principal subsidiary is defined as a subsidiary
representing more than 10% of net assets or pre-tax profit of the group, as shown in the most recent audited annual
accounts. A certificate signed by two directors of the guarantor that, in their opinion, a subsidiary of the guarantor is
or is not a Principal Subsidiary is conclusive and binding on the issuer, the guarantor and the noteholders. The
coupon steps up by 125bp in the event of a rating downgrade to non-investment grade by either or both Moodys and
S&P. Subsequently, the coupon steps down by 125bp in the event of a rating upgrade by both agencies to at least
Baa3/BBB-. The step up/step down will be activated from, and including, the next interest payment date.
Furthermore, the step up or step down in the coupon can only occur once during the term of the bonds.
Source: Company data, HSBC

324

abc

European Credit Research


Corporate Bond Covenants
September 2010

Japan Tobacco
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

10 Jun 2011 JTI UK Finance Plc


4.625%
Step up
(see Other)

Japan Tobacco Inc.

EUR800m

Senior unsecured

5.75%
06 Feb 2013 JTI UK Finance Plc
Step up
(see Other)

Japan Tobacco Inc.

GBP250m

Senior unsecured

4.5%
02 Apr 2014 JTI UK Finance Plc
Step up
(see Other)

Japan Tobacco Inc.

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers debt of the issuer and the guarantor subject to a GBP30m carve-out. It excludes security
interests already created by companies acquired by the group as well as the refinancing of such debt. It also
excludes security interests granted in favour of HM Customs as well as liens arising in the normal course of business
and security on property.
Put
None
Covenants
None
Other
Events of default include default of the issuer, the guarantor and any subsidiary, subject to a carve-out of GBP20m.
The rest of the event of default language (winding up, liquidation, MAC) refers to the issuer, the guarantor and
principal subsidiaries. A principal subsidiary is defined as a subsidiary accounting for more than 10% of consolidated
total assets and pre-tax profit in the latest audited accounts. The coupon steps up by 125bp in the event of a rating
downgrade to non-investment grade by either or both Moodys and S&P. Subsequently, the coupon steps down by
125bp in the event of a rating upgrade by both agencies to at least Baa3/BBB-. The step up/step down will be
activated from and including the next interest payment date. Furthermore, the step up or step down in the coupon
can only occur once during the term of the bonds.
Source: Company data, HSBC

325

abc

European Credit Research


Corporate Bond Covenants
September 2010

Philip Morris
Bond
Coupon

Maturity

5.625%

Issuer

Guarantor

Out amt

Type

06 Sep 2011 Philip Morris


International Inc

None

EUR1000m

Senior unsecured

4.25%

23 Mar 2012 Philip Morris


International Inc

None

EUR1250m

Senior unsecured

5.875%

04 Sep 2015 Philip Morris


International Inc

None

EUR750m

Senior unsecured

5.75%

24 Mar 2016 Philip Morris


International Inc

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the indebtedness on the issuer and its subsidiaries up to 15% of the consolidated net
tangible assets. This excludes in the case of a principal facility, liens incurred in connection with the issuance by a
state or political subdivision of any securities the interest on which is exempt from federal income taxes; liens on
property or shares of capital stock existing when acquired by the issuer or any subsidiary (including acquisition
through merger, share exchange or consolidation).
Put
None
Covenants
None
Other
None
Source: Company data, HSBC

326

abc

European Credit Research


Corporate Bond Covenants
September 2010

Swedish Match
Bond
Coupon

Maturity

Issuer

4.625%

28 Jun 2013 Swedish Match AB

Guarantor

Out amt

Type

None

EUR300m

Senior unsecured

Call
Non-callable except for taxation reasons
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and its subsidiaries. Relevant indebtedness is
defined as bonds/notes/other securities that are or are to be quoted/listed/dealt on any stock exchange/OTC market.
Put
Bondholder put at par if there is a change of control (CoC) and this is followed by: (i) rating downgrade from IG to
non-IG; (ii) withdrawal of ratings; or (iii) any further one-notch downgrade if already non-IG, within the CoC period.
CoC is defined as person directly or indirectly acquiring shares representing more than 50% of the issuers share
capital or voting rights. The CoC period is the 180-day period commencing either: (i) from; or (ii) prior to, the public
announcement of the CoC, depending on whether the rating event results from the actual CoC (the former) or a
potential CoC (the latter).
Covenants
None
Other
Events of default include default of the issuer or relevant subsidiaries, subject to a SEK50m (or equivalent) carveout. Relevant subsidiaries are subsidiaries whose sales or total assets represent at least 5% of the total consolidated
sales or total assets.
Source: Company data, HSBC

327

European Credit Research


Corporate Bond Covenants
September 2010

328

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Telecoms & Media

329

European Credit Research


Corporate Bond Covenants
September 2010

330

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Media & Technology

331

abc

European Credit Research


Corporate Bond Covenants
September 2010

Bertelsmann
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

26 Sep 2012 Bertelsmann AG

None

EUR500m

Senior unsecured

7.875%

16 Jan 2014 Bertelsmann AG

None

EUR750m

Senior unsecured

3.625%

06 Oct 2015 Bertelsmann AG

None

EUR500m

Senior unsecured

4.75%

26 Sep 2016 Bertelsmann AG

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer. Capital market indebtedness covers bonds,
notes, loan stock or other securities that are, or are capable of being, quoted, listed, dealt in or traded on a stock
exchange or securities market.
Put
Applies to the 2012, 2014 and 2016 bonds only: put at par plus accrued interest in the event of a change of control and
a rating downgrade by Moody's or S&P within the change of control period (defined as ending 120 days after the date
of announcement). A change of control is defined as the acquisition (indirectly or directly) of or more than 50% of the
issued capital of the issuer. A rating downgrade is defined as a downgrade to non-investment grade, or if already below
investment grade, a further downgrade of one or more notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR50m.
Source: Company data, HSBC

332

abc

European Credit Research


Corporate Bond Covenants
September 2010

BSkyB
Bond
Coupon

Maturity

Issuer

5.75%

20 Oct 2017 BSkyB Finance


UK Plc

Guarantor

Out amt

Type

BSkyB, British Sky


Broadcasting Limited
and Sky Subscribers
Services Limited

GBP400m

Senior unsecured

Call
Spens call higher of par or gilts.
Negative pledge
Negative pledge covers the indebtedness of the issuer or any of its subsidiaries. Indebtedness is defined as money
borrowed or raised and premiums (if any) and capitalised interest (if any) in respect thereof, plus bonds, notes and
similar debt instruments, finance leases and letters of credit.
Put
None
Covenants
None
Other
Events of default include default of the issuer or guarantor or any of its subsidiaries, subject to a carve out of
USD75m.
Source: Company data, HSBC

333

abc

European Credit Research


Corporate Bond Covenants
September 2010

BSkyB
Bond
Coupon

Maturity

Issuer

6%

21 May 2027 British Sky


Broadcasting
Group plc

Guarantor

Out amt

BSkyB Finance UK plc, GBP300m


BSkyB Publications
Limited, British Sky
Broadcasting Limited,
Sky Subscribers Services
Limited and BSkyB
Investments Limited

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the indebtedness of the issuer or any of its subsidiaries, excluding liens that are for less than
USD450m or 30% of consolidated net tangible assets, which ever is the greater. Indebtedness is defined as money
borrowed or raised and premiums (if any) and capitalised interest (if any) in respect thereof, plus bonds, notes and
similar debt instruments, finance leases and letters of credit.
Put
Put at par plus accrued interest if a change of control occurs (>50% stake and pro rata shareholder interests are not
substantially the same) and any agency (including Fitch) cuts to sub-investment grade (or any agency cuts by one
notch if Sky is already sub-investment grade). This rating change must either occur in the period beginning when a
potential change of control is publicly announced (with the change of control happening no more than 180 days later)
and ending 90 days after the change of control has occurred, or the ratings must be put on review within this period
and downgraded no more than 60 days later.
Covenants
None
Other
Events of default include default of the issuer or guarantor or any of its subsidiaries, subject to a carve out of USD75m.
Source: Company data, HSBC

334

abc

European Credit Research


Corporate Bond Covenants
September 2010

Daily Mail & General Trust


Bond
Coupon

Maturity

7.5%

Issuer

Guarantor

Out amt

Type

29 Mar 2013 Daily Mail & General None


Trust plc

GBP156.5m

Senior unsecured

5.75%

07 Dec 2018 Daily Mail & General None


Trust plc

GBP349.703m Senior unsecured

10%

09 Apr 2021 Daily Mail & General None


Trust plc

GBP156.4m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its subsidiaries. Relevant indebtedness
includes bonds, notes, debentures, loan stock or other securities that are, or are capable of being, traded on any
stock exchange or securities market (including OTC markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer or any of its material subsidiaries, subject to a carve out of GBP10m.
Material subsidiaries are defined as subsidiaries with profits before tax and extraordinary items or net assets (in each
case attributable to the issuer) representing 10% or more of the consolidated profits before tax and extraordinary
items or net assets in the latest audited accounts.
Source: Company data, HSBC

335

abc

European Credit Research


Corporate Bond Covenants
September 2010

Daily Mail & General Trust


Bond
Coupon

Maturity

Issuer

Guarantor

6.375%

21 Jun 2027 Daily Mail & General None


Trust plc

Out amt

Type

GBP200m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its subsidiaries. Relevant indebtedness
includes bonds, notes, debentures, loan stock or other securities that are, or are capable of being, traded on any
stock exchange or securities market (including OTC markets).
Put
Put at par plus accrued interest if a change of control occurs (>50% stake by anyone other than the Rothermeres
and pro rata shareholder interests are not substantially the same) and either agency cuts to sub-investment grade
(or any agency cuts by one notch if DMGT is already sub-investment grade). This change of rating must either occur
in the period beginning when a potential change of control is publicly announced (with the change of control
happening no more than 180 days later) and ending 90 days after the actual change of control has occurred, or the
ratings must be put on review within this period and downgraded no more than 60 days later.
Covenants
None
Other
Events of default include default of the issuer or any of its material subsidiaries, subject to a carve out of GBP10m.
Material subsidiaries exclude Euromoney Institutional Investor and any other subsidiary less than 75% owned, and
are defined as subsidiaries with profits before tax and extraordinary items or net assets (in each case attributable to
the issuer) representing 10% or more of the consolidated profits before tax and extraordinary items or net assets in
the latest audited accounts.
Source: Company data, HSBC

336

abc

European Credit Research


Corporate Bond Covenants
September 2010

Ericsson
Bond
Coupon

Maturity

Issuer

5%

24 Jun 2013 Telefonaktiebolaget


LM Ericsson

Guarantor

Out amt

Type

None

EUR600m

Senior unsecured

Call
Tax call and clean-up call (see put provision).
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer. Relevant indebtedness means any indebtedness in
the form of notes, bonds, debentures, debenture stock, loan stock or other securities with a maturity of more than
one year which are quoted, listed or dealt in on any stock exchange or regulated securities market, and where (for so
long as the Swedish kronor remains a currency in its own right) it is payable or required to be paid in any other
currency, or where it is payable or required to be paid in Swedish kroner and >50% of the aggregate principal
amount of such indebtedness was initially offered outside the Kingdom of Sweden.
Put
Put at par plus accrued interest in the occurrence of a change of control and a rating downgrade or negative rating
event by S&P or Moody's occurs within the change of control period. The period is defined as commencing on the
earlier of the date of the CoC and the date of the announcement (if any) of a potential CoC (with the change of
control happening no more than 180 days later) and ending 120 days after the public announcement. A change of
control is defined as the acquisition (indirectly or directly) of >50% of the voting rights of the issuer. A rating
downgrade is defined as a downgrade to non-investment grade, or if already below investment grade, a further
downgrade of one or more notches, or a withdrawal of the rating. A negative rating event shall be deemed to have
occurred if no rating has been assigned and the issuer does not seek to obtain a rating or if it is not at least of
investment grade by the end of the CoC period. The issuer has a clean-up call if 95% or more of the bonds have
been tendered following the activation of the clause.
Covenants
None
Other
Events of default include cross default of issuer on indebtedness in excess of USD50m.
Source: Company data, HSBC

337

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European Credit Research


Corporate Bond Covenants
September 2010

ITV
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

19 Oct 2015 ITV plc


5.375%
step up
(see "Other")

Carlton Communications GBP383m


Ltd

Senior unsecured

7.375%

Carlton Communications GBP250m


Ltd

Senior unsecured

05 Jan 2017 ITV plc

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer. Relevant indebtedness includes bonds, notes, loan
stock or other securities that are quoted, listed, dealt in or traded on any recognised securities market (including
OTC markets).
Put
Put at par plus accrued interest if a change of control occurs (>50% stake) and any agency (including Fitch) cuts to
sub-investment grade within 180 days (or either agency cuts by one notch if ITV is already sub-investment grade).
Covenants
None
Other
Carlton Communications plc will be released from its obligation as guarantor in the event that it guarantees no other
capital market indebtedness of the issuer. Events of default include default of the issuer, guarantor or any principal
subsidiaries, subject to a carve out (the greater of GBP25m or 5% of the adjusted share capital and reserves).
Principal subsidiaries are defined as Granada plc, the guarantor and any subsidiary which holds a Channel 3
Licence (except Border Television Limited and HTV Group Limited). The coupon steps up by 125bp in the case of a
rating downgrade to below Baa3 by Moody's or to below BBB- by S&P. Only applies to the 2011 bond: coupon steps
down by 125bp in the case of a subsequent rating upgrade by both agencies to at least Baa3/BBB-. The step up/step
down will accrue from the next interest payment date.
Source: Company data, HSBC

338

abc

European Credit Research


Corporate Bond Covenants
September 2010

Lagardere SCA
Bond
Coupon

Maturity

Issuer

4.875%

06 Oct 2014 Lagardere SCA

Guarantor

Out amt

Type

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and the principal subsidiaries. Relevant
indebtedness includes bonds, notes, debentures or other securities that are quoted, listed or ordinarily traded on any
stock exchange, or on any over-the-counter securities market or other securities market. Principal subsidiary means
any subsidiary of the issuer whose total assets or gross revenues represent more than 10% of the total consolidated
assets or the gross consolidated revenues of the issuer.
Put
Put at par plus accrued interest in the event of a change of control. A change of control occurs when the Lagardere
family ceases to control all significant decisions of the general partners of the issuer or ceases to control the
appointment of the managing partners of the issuer.
Covenants
None
Other
Events of default include default of the issuer or any principal subsidiary, subject to a carve out of EUR50m. Principal
subsidiary means any subsidiary of the issuer whose total assets or gross revenues represent more than 10% of the
total consolidated assets or the gross consolidated revenues of the issuer.
Source: Company data, HSBC

339

abc

European Credit Research


Corporate Bond Covenants
September 2010

Nokia
Bond
Coupon

Maturity

5.5%
6.75%

Issuer

Guarantor

Out amt

Type

04 Feb 2014 Nokia Oyj

None

EUR1250m

Senior unsecured

04 Feb 2019 Nokia Oyj

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its principal subsidiaries. Relevant
indebtedness includes bonds, notes, debentures, debenture stock, loan stock or certificate or other securities that
are, or are capable of being, traded on any stock exchange or securities market (including OTC markets), but
excluding non-recourse securitisation debt. A principal subsidiary is defined as a subsidiary whose total assets or net
sales represent more than 10% of total consolidated assets or consolidated net sales as calculated by reference to
the then latest audited accounts.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer or any principal subsidiary on indebtedness (other than nonrecourse securitisation debt), subject to a carve out of EUR75m. Principal subsidiary is defined as a subsidiary
whose total assets or net sales represent more than 10% of total consolidated assets or consolidated net sales as
calculated by reference to the then latest audited accounts.
Source: Company data, HSBC

340

abc

European Credit Research


Corporate Bond Covenants
September 2010

Pearson
Bond
Coupon

Maturity

Issuer

7%

27 Oct 2014 Pearson plc

Guarantor

Out amt

Type

None

GBP250m

Senior unsecured

Call
Spens call reference UK Treasury Stock 8% 2015. Also callable for taxation reasons.
Negative pledge
Negative pledge covers the quoted indebtedness of the issuer. Quoted indebtedness includes bonds, notes,
debentures, loan stock or other securities that are, or are capable of being, traded on any stock exchange or
securities market (including OTC markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer or any material company, subject to a carve out of USD30m. A material
company is defined as any subsidiary with (a) unconsolidated profits (before interest, taxation and non-operating
items) representing more than 5% of consolidated profits or (b) with external turnover accounting for more than 3%
of consolidated turnover, in the most recent annual consolidated financial statements. Material companies which sell
assets or the right to receive any trading profits or turnover are excluded from this definition from the date of such
disposal.
Source: Company data, HSBC

341

abc

European Credit Research


Corporate Bond Covenants
September 2010

Pearson
Bond
Coupon

Maturity

Issuer

Guarantor

6%

15 Dec 2015 Pearson Funding One Pearson plc


plc

Out amt

Type

GBP300m

Senior unsecured

Call
Tax call and spens call reference UKT 4.75% 2015.
Negative pledge
Negative pledge covers the quoted indebtedness of the issuer and guarantor. Quoted indebtedness includes bonds,
notes, debenture, debenture stock, loan stock or other securities that are, or are capable of being, traded on any
stock exchange or securities market (including OTC markets).
Put
Put at par plus accrued interest in the event of a change of control and a rating downgrade by Moody's or S&P within
the change of control period. The period is defined as starting 60 days before the first public announcement by the
guarantor of any change of control (or pending change of control) and ending 60 days following the change of
control. Alternatively, the bonds are puttable if the ratings are put on review within this period and downgraded no
more than 60 days after public announcement by Moody's or S&P. A change of control is defined as the acquisition
(indirectly or directly) of >50% of the issued capital or of the voting rights of the guarantor. A rating downgrade is
defined as a downgrade to non-investment grade, or, if already below investment grade, a downgrade of one or
more notches (Ba1/BB+ to Ba2/BB being one notch), or a withdrawal of the rating.
Covenants
None
Other
Events of default include default of issuer, guarantor or any material company on indebtedness exceeding USD50m.
Material company is defined as any subsidiary of the guarantor whose unconsolidated profits exceed 5% of the
consolidated profits of the guarantor and its subsidiaries (the group) or whose external turnover exceeds 3% of the
consolidated turnover of the group. Material companies which sell assets or the right to receive any trading profits or
turnover are excluded from this definition from the date of such disposal.
Source: Company data, HSBC

342

abc

European Credit Research


Corporate Bond Covenants
September 2010

Publicis
Bond
Coupon

Maturity

Issuer

4.125%

31 Jan 2012 Publicis Groupe SA

Guarantor

Out amt

Type

None

EUR505.725m Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer. Relevant debt covers bonds or notes, that are, or are capable
of being, listed on any regulated securities exchange.
Put
None
Covenants
None
Other
Events of default include default of the issuer or its material subsidiaries, subject to a carve out of EUR25m. Material
subsidiary means any subsidiary whose (a) net revenues or consolidated net revenues, (before taxes and extraordinary
items) represent at least 5% of the consolidated net revenues of the issuer and of its subsidiaries (before taxes and
extraordinary items), or (b) gross assets or consolidated gross assets represent 5% or more of the gross consolidated
assets of the issuer and its subsidiaries calculated based upon the most recent audited financial statements.
Source: Company data, HSBC

343

abc

European Credit Research


Corporate Bond Covenants
September 2010

Reed Elsevier
Bond
Coupon

Maturity

5.625%
7%

Issuer

Guarantor

Out amt

Type

20 Oct 2016 Reed Elsevier


Investments plc

Reed Elsevier plc and


Reed Elsevier N.V.

GBP400m

Senior unsecured

11 Dec 2017 Reed Elsevier


Investments plc

Reed Elsevier plc and


Reed Elsevier N.V.

GBP300m

Senior unsecured

Call
Tax call and clean-up call (see put provision).
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, the guarantors and other Reed Elsevier component
companies. Relevant indebtedness means any indebtedness in the form of notes, bonds, debentures, debenture
stock, loan stock or other securities with a maturity of more than one year which are quoted, listed or dealt in on any
stock exchange or regulated securities market (includes any guarantee in respect of such indebtedness). Reed
Elsevier component companies are the collective legal entities of the guarantors and their subsidiaries.
Put
Put at par plus accrued interest if a change of control occurs (>50% stake in each guarantor and pro rata
shareholder interests are not substantially the same) and any agency (including Fitch) cuts to non-investment grade
(or any agency cuts by one notch if Reed is already non-investment grade) or if the rating is withdrawn. This rating
change must occur in the period beginning when a potential change of control is publicly announced (with the
change of control happening no more than 180 days later) and ending 90 days after the change of control has
occurred. Alternatively, the bonds are puttable if the ratings are put on review within this period and downgraded no
more than 60 days later. The issuer has a clean-up call if 80% or more of the bonds have been tendered following
the activation of the clause.
Covenants
None
Other
Events of default include cross default of the issuer, guarantor or material subsidiary, subject to a carve out of
GBP30m. Material subsidiary is defined as any Reed Elsevier component company whose EBITDA or net external
revenues equal or exceed 10% of the combined EBITDA or net external revenues of Reed Elsevier.
Source: Company data, HSBC

344

abc

European Credit Research


Corporate Bond Covenants
September 2010

Reuters
Bond
Coupon

Maturity

Issuer

4.625%

19 Nov 2010 Reuters Finance plc

Guarantor

Out amt

Type

Reuters Group plc

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or the guarantor. Relevant indebtedness includes
bonds, notes, debentures, debenture stock, loan stock or other securities that are, or are capable of being, traded on
any stock exchange or securities market (including OTC markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor.
Source: Company data, HSBC

345

abc

European Credit Research


Corporate Bond Covenants
September 2010

SAP
Bond
Coupon

Maturity

1.75%

Issuer

Guarantor

Out amt

Type

02 Jun 2012 SAP AG

None

EUR600m

Senior unsecured

2.25%

08 Jun 2013 SAP AG

None

EUR600m

Senior unsecured

2.5%

10 Apr 2014 SAP AG

None

EUR500m

Senior unsecured

3.5%

10 Apr 2017 SAP AG

None

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer and any principal subsidiary. Capital market
indebtedness covers bonds, notes, or any similar securities which are, or are capable of being, quoted, listed or
traded on any stock exchange or over-the-counter securities market or certificates of indebtedness
(Schuldscheindarlehen) governed by German law. Principal subsidiary means subsidiary of the issuer: (a) which is
directly or indirectly controlled by the issuer; (b) in which the issuer holds directly or indirectly the majority of the
shares; or (c) for which the issuer is able to directly or indirectly exercise the majority of voting rights.
Put
Put at par plus accrued interest if a CoC has occurred and within the CoC period any rating previously assigned by
any rating agency (S&P or Moody's) is withdrawn or downgraded. This can either mean changed from an investment
grade rating to a non-investment grade rating or, if already below investment grade, downgraded by one full notch.
The bonds are also puttable if at the time of the CoC there is no rating assigned to the notes or the issuer and no
rating agency assigns during the CoC period an investment grade rating to the notes. A CoC has occurred when a
person directly or indirectly acquires more than 50% of the issued ordinary share capital of the issuer. The CoC
period is means the period commencing on the date of any public announcement or statement of the issuer and
ending on the 90th day after the CoC.
Covenants
None
Other
Events of default include cross-default of the issuer or any principal subsidiary on indebtedness exceeding EUR50m.
Source: Company data, HSBC

346

abc

European Credit Research


Corporate Bond Covenants
September 2010

TF1
Bond
Coupon

Maturity

Issuer

Guarantor

4.375%

12 Nov 2010 Tlvision Franaise 1 None

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer. Relevant debt includes debt securities, equity securities or
equivalent debt instruments that are, or are capable of being, quoted, listed or ordinarily dealt in on any stock
exchange or securities market (including OTC markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR15m.
Source: Company data, HSBC

347

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vivendi
Bond
Coupon

Maturity

Issuer

3.875%

15 Feb 2012 Vivendi SA

Guarantor

Out amt

Type

None

EUR600m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer. Relevant debt covers bonds, notes, debentures, loan stock or
other securities that are, or are intended to be, traded on a stock exchange or securities market (including OTC
markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer or its material subsidiaries, subject to a carve out of EUR100m.
Material subsidiaries are defined as: (a) subsidiaries whose revenues and/or EBITDA represent 5% or more of the
consolidated group revenue and/or EBITDA in the latest annual financial statements; (b) the subsidiary of the issuer
which owns the interest of the group in National Broadcasting Company Universal Inc. and each direct or indirect
holding company of that subsidiary; (c) (for so long as the group owns 5%. or more of the total share capital of Volia
Environnement S.A.) any subsidiary of the issuer which owns the interest of the group in Volia Environnement S.A.
and each direct or indirect holding company of that subsidiary; or (d) each subsidiary of the issuer that acquires any
assets or shares having, at the time of the acquisition, a value equal to 5% or more of the consolidated total assets
of the group (as shown in the then latest audited consolidated financial statements of the group) and each direct or
indirect holding company of that subsidiary. An event of default also occurs if the issuer sells or otherwise disposes
of all, or almost all, of its assets.
Source: Company data, HSBC

348

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vivendi
Bond
Coupon

Maturity

4.5%

Issuer

Guarantor

Out amt

Type

03 Oct 2013 Vivendi SA

None

EUR700m

Senior unsecured

7.75%

23 Jan 2014 Vivendi SA

None

EUR1120m

Senior unsecured

4.25%

01 Dec 2016 Vivendi SA

None

EUR500m

Senior unsecured

4%

31 Mar 2017 Vivendi SA

None

EUR750m

Unsubordinated notes

4.875%

02 Dec 2019 Vivendi SA

None

EUR700m

Senior unsecured

Call
Tax call and clean-up call (see put provision).
Negative pledge
Negative pledge covers the relevant debt of the issuer. Relevant debt covers bonds, notes, debentures, loan stock or
other securities that are, or are intended to be, quoted, listed or ordinarily dealt in on any stock exchange or
securities market (including OTC markets).
Put
Put at par plus accrued interest in the event of a change of control and a rating downgrade by any agency (including
Fitch) within the change of control period. The period is defined as commencing on the date of the first public
announcement of the relevant change of control and ending on the date which is 60 days thereafter; or the period
commencing 60 days before the date of the first public announcement of the relevant change of control and ending
on the date of such announcement. A change of control is defined as the acquisition (indirectly or directly) of >50%
of the voting rights and pro rata shareholder interests are not substantially the same. A rating downgrade is defined
as a downgrade to non-investment grade, or if already below investment grade, a downgrade of one or more notches
(Ba1/BB+ to Ba2/BB being one notch), or a withdrawal of the rating. The issuer shall redeem, or at the option of the
issuer, purchase the relevant notes unless previously redeemed or purchased.
Covenants
None
Other
Events of default include default of the issuer and material subsidiaries, subject to a carve out of EUR100m. Material
subsidiaries are defined as: (a) subsidiaries whose revenues and/or EBITDA represent 5% or more of the consolidated
group revenue and/or EBITDA in the latest annual financial statements; (b) the subsidiary of the issuer which owns the
interest of the group in National Broadcasting Company Universal Inc. and each direct or indirect holding company of
that subsidiary; (c) each subsidiary of the issuer that acquires any assets or shares having, at the time of the
acquisition, a value equal to 5% or more of the consolidated total assets of the group (as shown in the then latest
audited consolidated financial statements of the group) and each direct or indirect holding company of that subsidiary.
An event of default also occurs if the issuer sells or otherwise disposes of all or almost all of its assets.
Source: Company data, HSBC

349

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wolters Kluwer
Bond
Coupon

Maturity

5.125%
6.375%

Issuer

Guarantor

Out amt

Type

27 Jan 2014 Wolters Kluwer N.V

None

EUR700m

Senior unsecured

10 Apr 2018 Wolters Kluwer NV

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its subsidiaries. Relevant indebtedness
includes bonds, notes, debentures, debenture stock, loan stock, certificates or other instrument that are, or are
capable of being, traded on any stock exchange or securities market (including OTC markets) and any guarantee or
indemnity in respect of any such indebtedness.
Put
Applies to the 2018 bond: Put at par plus accrued interest if a change of control occurs (>50% stake of issued
capital/voting rights and pro rata shareholder interests are not substantially the same) and either agency cuts to noninvestment grade (or either agency cuts by one notch if issuer is already non-investment grade) or a negative rating
event occurs. This must occur in the period beginning the date when a relevant potential change of control is publicly
announced (with the change of control happening no more than 180 days later) or the date of the first public
announcement of a relevant change of control, which ever is the earlier, and ending 180 days after the
announcement. A negative rating event shall be deemed to have occurred if no rating has been assigned and the
issuer does not seek to obtain a rating or if it is not at least of investment grade by the end of the change of control
period.
Covenants
None
Other
Events of default include default of the issuer or any subsidiary, subject to a carve out of EUR25m.
Source: Company data, HSBC

350

abc

European Credit Research


Corporate Bond Covenants
September 2010

WPP
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

05 Dec 2013 WPP Group Plc

WPP 2005 Ltd.

EUR600m

Senior unsecured

5.25%

30 Jan 2015 WPP Finance SA

WPP Group plc and


WPP 2005 Ltd.

EUR500m

Senior unsecured

6.625%

12 May 2016 WPP Group plc

WPP 2005 Ltd.

EUR750m

Senior unsecured

6%

04 Apr 2017 WPP Group Plc

WPP 2005 Ltd.

GBP400m

Senior unsecured

6.375%

06 Nov 2020 WPP Finance SA

WPP Group plc and


WPP 2005 Ltd.

GBP200m

Senior unsecured

Call
Tax call and clean-up call (see put provision).
Negative pledge
Negative pledge covers the relevant debt of the issuer or any of its principal subsidiaries. Relevant debt includes
bonds, notes, debentures, loan stock or other securities that are, or are capable of being, traded on any stock
exchange or securities market (including OTC markets), but excludes indebtedness with a stated maturity of less
than one year. Principal subsidiaries are defined as subsidiaries with consolidated revenue higher than 5% of the
consolidated group's revenues.
Put
Put at par plus accrued interest if a change of control occurs (>50% stake of share capital or voting rights of WPP or
[if issued by WPP Finance] WPP Finance or WPP 2005 Limited ceases to be a direct or indirect subsidiary of the
WPP Group plc) and any agency (including Fitch) cuts to non-investment grade within 120 days, or either Moodys or
S&P cuts by one notch if WPP is already non-investment grade, or the rating is withdrawn. Alternatively, the bonds
are puttable if the ratings are put on review within 120 days of the change of control and subsequently downgraded.
The issuer has a clean-up call if 80% or more of the bonds have been tendered following the activation of the clause.
Covenants
None
Other
Events of default include default of the issuer, the guarantor or any of its principal subsidiaries, subject to a carve out
of GBP30m. Principal subsidiaries are defined as subsidiaries with consolidated revenue higher than 5% of the
consolidated group's revenues for that financial year.
Source: Company data, HSBC

351

European Credit Research


Corporate Bond Covenants
September 2010

352

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Telecoms

353

abc

European Credit Research


Corporate Bond Covenants
September 2010

America Movil
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

3.75%

28 Jun 2017 America Movil SAB de Radiomovil Dipsa SA de EUR1000m


CV
CV TELCEL

Senior unsecured

4.75%

28 Jun 2022 America Movil SAB de Radiomovil Dipsa SA de EUR750m


CV
CV TELCEL

Senior unsecured

5.75%

28 Jun 2030 America Movil SAB de Radiomovil Dipsa SA de GBP650m


CV
CV TELCEL

Senior unsecured

Call
Callable at a redemption price equal to 100% of the principal amount and the sum of the present values of each
remaining scheduled payment of principal and interest thereon discounted to the redemption date on an annual basis
at the Bund rate + 35 basis points (in the case of the 2017 euro notes) or +40 basis points (in the case of the 2022
euro notes) and at the sterling benchmark rate plus 30 basis points in the case of the 2030 sterling notes. All bonds
also callable for taxation reasons.
Negative pledge
See covenants for limitations on liens.
Put
None
Covenants
The issuer or any restricted subsidiary may not issue or assume any liens on restricted property to secure debt, if the
debt plus aggregated amount of attributable debt exceeds 15% of consolidated net tangible assets. The issuer or any
restricted subsidiary may not enter into any sale and leaseback transaction without providing that the debt securities
will be secured equally. The issuer or any restricted subsidiary may not sell, transfer or otherwise dispose of >50% of
capital stock of Telcel. The issuer or Telcel may not embark on any mergers, consolidation or sale of assets.
Other
Events of default include default of the issuer or the guarantor subject to a carve out of USD25m. The documentation
includes defeasance language.
Source: Company data, HSBC

354

abc

European Credit Research


Corporate Bond Covenants
September 2010

AT&T
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

15 Mar 2013 AT&T Inc

None

EUR1250m

Senior unsecured

6.125%

02 Apr 2015 AT&T Inc

None

EUR1250m

Senior unsecured

5.875%

28 Apr 2017 AT&T Inc

None

GBP750m

Senior unsecured

5.5%

15 Mar 2027 AT&T Inc

None

GBP600m

Senior unsecured

7%

30 Apr 2040 AT&T Inc

None

GBP1100m

Senior unsecured

Call
2013 and 2027 bonds: callable reference European government bond rate + 50 bps. 2017 and 2040 bonds: spens
call reference UK government bond rate + 25bp. 2015 bond: non callable. All bonds callable for taxation reasons.
Negative pledge
2015 bond gives no negative pledge. For all others: notes will rank pari passu, without any preference among
themselves, with all other outstanding unsecured and unsubordinated obligations of the issuer, present and future,
but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors rights.
Put
None
Covenants
None
Other
Events of default only includes a default on the bonds or bankruptcy of the issuer.
Source: Company data, HSBC

355

abc

European Credit Research


Corporate Bond Covenants
September 2010

Belgacom
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

23 Nov 2011 Belgacom SA


4.125%
Step up
(see "Other")

None

EUR775m

Senior unsecured

4.375%
23 Nov 2016 Belgacom SA
Step up
(see "Other")

None

EUR950m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers bonds, notes, debentures, CP or other securities.
Put
None
Covenants
None
Other
Events of default include default of the issuer subject to a carve out of USD30m. The coupon steps up according to
the lower of Belgacom's S&P or Moody's rating: 50bp per notch below Baa3/BBB-. The coupon steps down
according to the same mechanism. The step up/step down will accrue from the next interest payment date.
Source: Company data, HSBC

356

abc

European Credit Research


Corporate Bond Covenants
September 2010

BT
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

15 Feb 2011 British


None
7.875%
Step up
Telecommunications
(see "Other")
plc

EUR1125m

Senior unsecured

8.5%
07 Dec 2016 British
None
Step up
Telecommunications
(see "Other")
plc

GBP700m

Senior unsecured

8.625%

26 Mar 2020 British


None
Telecommunications
plc

GBP300m

Senior unsecured

5.75%

07 Dec 2028 British


None
Telecommunications
plc

GBP600m

Senior unsecured

Call
2011 bond: spens call reference government bond rate + 30bp. 2016 bond: spens call reference government
bond rate + 35bp. All also callable for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or any of its subsidiaries. Capital market
indebtedness is any obligation in the form of bonds, notes or other securities which are (or the issuer has publicly
declared that it intends to have) quoted, listed, dealt in or traded on any stock exchange or other recognised
securities market.
Put
Put at par plus accrued interests if (a) the issuer consolidates with or merges into any other person, or conveys,
transfers or leases all substantial assets to another person except for the purpose of a reconstruction or an
amalgamation approved by the trustee in writing, and (b) the rating assigned to the notes is lower than Baa2 by
Moody's and/or BBB by S&P as a result of such a transaction.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of GBP25m. This only applies to the 2011 and
2016 bonds: coupon steps up by 25bp per notch and per rating agency following a rating downgrade to below A3 by
Moody's or to below A- by S&P. The coupon steps down by 25bp per notch and per rating agency following
subsequent upgrades. The step up/step down will accrue from the next interest payment date.
Source: Company data, HSBC

357

abc

European Credit Research


Corporate Bond Covenants
September 2010

BT
Bond
Coupon

Maturity

Issuer

5.25%

22 Jan 2013

5.25%

Guarantor

Out amt

Type

British Telecommunications plc None

EUR1000m

Senior unsecured

23 Jun 2014

British Telecommunications plc None

EUR750m

Senior unsecured

6.125%

11 Jul 2014

British Telecommunications plc None

EUR600m

Senior unsecured

6.5%

07 Jul 2015

British Telecommunications plc None

EUR1000m

Senior unsecured

6.625%

23 Jun 2017

British Telecommunications plc None

GBP500m

Senior unsecured

6.375%

23 Jun 2037

British Telecommunications plc None

GBP500m

Senior unsecured

Call
2013 bond: callable reference government bond rate + 27.5bps. Jun 2014 bond: spens call reference government
bond rate + 27.5bp. Jul 2014 bond: callable reference government bond rate + 35bps. Jul 2015 bond : callable
reference government bond rate + 27.5bps. 2017 bond: spens call reference government bond rate + 30bp. 2037
bond: spens call reference government bond rate + 35bp. All also callable for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or any of its subsidiaries. Capital market
indebtedness is any obligation in the form of bonds, notes or other securities which are (or the issuer has publicly declared
that it intends to have) quoted, listed, dealt in or traded on any stock exchange or other recognised securities market.
Put
Put at par plus accrued interest in the occurence of a change of control and a rating downgrade or negative rating event
by any agency (including Fitch) occurs within the change of control period. The period is defined as beginning when a
potential CoC is publicly announced (with the CoC happening no more than 180 days later) and ending 90 days after the
actual CoC has occurred. Alternatively, if the rating is under review by a rating agency for more than 60 days after such
announcement, the bonds are puttable. A change of control is defined as the acquisition (indirectly or directly) of >50% of
the issued capital or voting rights of the issuer or direct/indirect holding company of the issuer. A rating downgrade is
defined as a downgrade to non-investment grade, or if already below investment grade, a further downgrade of one or
more notches, or a withdrawal of the rating. A negative rating event shall be deemed to have occurred if no rating has
been assigned and the issuer does not seek to obtain a rating or if it is not at least of investment grade by the end of the
CoC period.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of the higher of GBP25m and 1% of the
adjusted share capital and reserves.
Source: Company data, HSBC

358

abc

European Credit Research


Corporate Bond Covenants
September 2010

Deutsche Telekom
Bond
Coupon

Maturity

11 Jul 2011
7.125%
Step up
(see "Other")

Issuer

Guarantor

Out amt

Deutsche Telekom AG EUR3500m


Deutsche Telekom
International Finance

7.625%
15 Jun 2030 Deutsche Telekom
Deutsche Telekom AG GBP300m
Step up
International Finance
(see "Other")

Type
Senior unsecured

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or the guarantor. Capital market indebtedness
includes bonds, notes or other debt securities which are capable of being listed or traded on any stock exchange or
other recognised securities market, but excludes any off-balance sheet assets and obligations as well as
consolidations or mergers with other companies or firms and any assets sold on a non-recourse basis.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m. 2030 bond
documentations include defeasance language. The coupon steps up by 50bp in the case of a rating downgrade to
below A3 by Moody's and to below A- by S&P. Subsequently, coupon steps down by 50bp in the case of a rating
upgrade by both agencies above Baa1/BBB+. The step up/step down will accrue from the next interest payment date.
Source: Company data, HSBC

359

abc

European Credit Research


Corporate Bond Covenants
September 2010

Deutsche Telekom
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

09 Dec 2010 Deutsche Telekom


Deutsche Telekom AG GBP250m
6.25%
International Finance
Step up
(see "Other")

Senior unsecured

8.125%
29 May 2012 Deutsche Telekom
Deutsche Telekom AG EUR2000m
International Finance
Step up
(see "Other")

Senior unsecured

6.625%
29 Mar 2018 Deutsche Telekom
Deutsche Telekom AG EUR500m
International Finance
Step up
(see "Other")

Senior unsecured

7.5%
24 Jan 2033 Deutsche Telekom
Deutsche Telekom AG EUR500m
Step up
International Finance
(see "Other")

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or the guarantor. Capital market indebtedness
includes bonds, notes or other debt securities which are capable of being listed or traded on any stock exchange or
other recognised securities market, but excludes any off-balance sheet assets and obligations as well as
consolidations or mergers with other companies or firms and any assets sold on a non-recourse basis.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m. 2012 bond
documentation includes defeasance language. The coupon steps up by 50bp in the case of a rating downgrade to
below Baa1 by Moody's and to below BBB+ by S&P. Subsequently, coupon steps down by 50bp in the case of a
rating upgrade to above Baa2 by Moody's and BBB by S&P. The step up/step down will accrue from the next interest
payment date.
Source: Company data, HSBC

360

abc

European Credit Research


Corporate Bond Covenants
September 2010

Deutsche Telekom
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

26 Sep 2012 Deutsche Telekom


Deutsche Telekom AG GBP500m
7.125%
International Finance
Step up
(see "Other")

Senior unsecured

7.375%
04 Dec 2019 Deutsche Telekom
Deutsche Telekom AG GBP250m
Step up
International Finance
(see "Other")

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or the guarantor. Capital market indebtedness
includes bonds, notes or other debt securities which are capable of being listed or traded on any stock exchange or
other recognised securities market, but excludes any off-balance sheet assets and obligations as well as
consolidations or mergers with other companies or firms and any assets sold on a non-recourse basis.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m. 2012 bond
documentation includes defeasance language. The coupon steps up by 50bp in the case of a rating downgrade to
below Baa1 by Moody's and to below BBB+ by S&P. Subsequently, coupon steps down by 50bp in the case of a
rating upgrade to above Baa2 by Moody's and BBB by S&P. The step up/step down will accrue from the next interest
payment date.
Source: Company data, HSBC

361

abc

European Credit Research


Corporate Bond Covenants
September 2010

Deutsche Telekom
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4%

13 Apr 2011 Deutsche Telekom


Deutsche Telekom AG EUR750m
International Finance

Senior unsecured

4.5%

25 Oct 2013 Deutsche Telekom


Deutsche Telekom AG EUR1500m
International Finance
BV

Senior unsecured

5.75%

10 Jan 2014 Deutsche Telekom


Deutsche Telekom AG EUR500m
International Finance
BV

Senior unsecured

4.375%

02 Jun 2014 Deutsche Telekom


Deutsche Telekom AG EUR500m
International Finance
BV

Senior unsecured

5.875%

10 Sep 2014 Deutsche Telekom


Deutsche Telekom AG EUR750m
International Finance
BV

Senior unsecured

4%

19 Jan 2015 Deutsche Telekom


Deutsche Telekom AG EUR1750m
International Finance
BV

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or the guarantor. Capital market indebtedness
includes bonds, notes or other debt securities which are capable of being listed or traded on any stock exchange or
other recognised securities market, but excludes any off-balance sheet assets and obligations as well as
consolidations or mergers with other companies or firms and any assets sold on a non-recourse basis.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m.
Source: Company data, HSBC

362

abc

European Credit Research


Corporate Bond Covenants
September 2010

Deutsche Telekom
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.625%

19 Jul 2013

Deutsche Telekom AG GBP250m


Deutsche Telekom
International Finance

Senior unsecured

4.875%

23 Sep 2014 Deutsche Telekom


Deutsche Telekom AG GBP250m
International Finance
BV

Senior unsecured

5.75%

14 Apr 2015 Deutsche Telekom


Deutsche Telekom AG EUR1500m
International Finance
BV

Senior unsecured

4.75%

31 May 2016 Deutsche Telekom


Deutsche Telekom AG EUR500m
International Finance

Senior unsecured

6%

20 Jan 2017 Deutsche Telekom


Deutsche Telekom AG EUR2000m
International Finance
BV

Senior unsecured

5.375%

27 Jul 2021

Senior unsecured

Deutsche Telekom
Deutsche Telekom AG EUR350m
International Finance
BV

Type

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or the guarantor. Capital market indebtedness
includes bonds, notes or other debt securities which are capable of being listed or traded on any stock exchange or
other recognised securities market, but excludes any off-balance sheet assets and obligations as well as
consolidations or mergers with other companies or firms and any assets sold on a non-recourse basis.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m.
Source: Company data, HSBC

363

abc

European Credit Research


Corporate Bond Covenants
September 2010

Deutsche Telekom
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.25%

16 Mar 2020 Deutsche Telekom


Deutsche Telekom AG EUR500m
International Finance
BV

Senior unsecured

6.5%

08 Apr 2022 Deutsche Telekom


Deutsche Telekom AG GBP700m
International Finance
BV

Senior unsecured

4.25%

13 Jul 2022

Senior unsecured

4.875%

22 Apr 2025 Deutsche Telekom


Deutsche Telekom AG EUR500m
International Finance
BV

Senior unsecured

8.875%

27 Nov 2028 Deutsche Telekom


Deutsche Telekom AG GBP250m
International Finance
BV

Senior unsecured

Deutsche Telekom
Deutsche Telekom AG EUR1250m
International Finance
BV

Type

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer or the guarantor. Capital market indebtedness
includes bonds, notes or other debt securities which are capable of being listed or traded on any stock exchange or
other recognised securities market, but excludes any off-balance sheet assets and obligations as well as
consolidations or mergers with other companies or firms and any assets sold on a non-recourse basis.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m.
Source: Company data, HSBC

364

abc

European Credit Research


Corporate Bond Covenants
September 2010

Eutelsat
Bond
Coupon

Maturity

Issuer

4.125%

27 Mar 2017 Eutelsat SA

Guarantor

Out amt

Type

None

EUR850m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer or any of its material subsidiaries. Material subsidiary means
any subsidiary of the issuer whose EBITDA is 10% or more of consolidated EBITDA or whose total assets are 10%
or more of consolidated total assets of the issuer. Relevant debt includes any bonds, notes or other debt securities
that are capable of being quoted, admitted or trading on any stock exchange, OTC market or other securities market.
Put
Put at par plus accrued interest in the occurence of a change of control and a negative rating event occurs within the
change of control period. The period is defined as 120 days after the public announcement of the CoC. A CoC
occurs when Eutelsat Communications S.A. ceases to own at least 50% of the share capital and the voting rights of
the issuer. A negative rating event is defined as either a downgrade to non-investment grade, or if already below
investment grade, a further downgrade of one or more notches, or a withdrawal of the rating by S&P, and in case of
a withdrawal by S&P of its credit rating, Moody's.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR50m.
Source: Company data, HSBC

365

abc

European Credit Research


Corporate Bond Covenants
September 2010

France Telecom
Bond
Coupon

Maturity

3%
6.625%

Issuer

Guarantor

Out amt

Type

14 Oct 2010 France Telecom

None

EUR1000m

Senior unsecured

10 Nov 2010 France Telecom

None

EUR1400m

Senior unsecured

7.5%
14 Mar 2011 France Telecom
step up
(see "Other")

None

GBP600m

Senior unsecured

4.625%

23 Jan 2012 France Telecom

None

EUR750m

Senior unsecured

4.375%

21 Feb 2012 France Telecom S.A. None

EUR1225m

Senior unsecured

5.5%

24 May 2012 France Telecom SA

None

GBP250m

Senior unsecured

7.25%

28 Jan 2013 France Telecom

None

EUR3500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its principal subsidiaries. Relevant
indebtedness includes bonds, notes (including those under the ETMN Programme), or other securities that are, or
are capable of being, traded on any stock exchange or securities market (including OTC markets), but excluding
private placements. A principal subsidiary is defined as a subsidiary that is managed and controlled by the issuer
and whose total assets or operating income represent more than 15% of total consolidated assets or consolidated
operating income as calculated by reference to the then latest audited accounts.
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR20m. Only applies to the 2011 bond:
coupon steps up by 25bp per notch and per rating agency following a rating downgrade to below A3 by Moody's or to
below A- by S&P. The coupon steps down by 25bp per notch and per rating agency following subsequent upgrades.
The step up/step down will accrue from the next interest payment date.
Source: Company data, HSBC

366

abc

European Credit Research


Corporate Bond Covenants
September 2010

France Telecom
Bond
Coupon

Maturity

5.25%

Issuer

Guarantor

Out amt

Type

22 May 2014 France Telecom SA

None

EUR750m

Senior unsecured

3.625%

14 Oct 2015 France Telecom

None

EUR1150m

Senior unsecured

4.75%

21 Feb 2017 France Telecom S.A. None

EUR1900m

Senior unsecured

8%

20 Dec 2017 France Telecom

None

GBP500m

Senior unsecured

5.625%

22 May 2018 France Telecom SA

None

EUR1550m

Senior unsecured

7.25%

10 Nov 2020 France Telecom

None

GBP450m

Senior unsecured

4.219%

13 Nov 2022 France Telecom SA

None

EUR500m

Senior unsecured

5.25%

05 Dec 2025 France Telecom SA

None

GBP350m

Senior unsecured

Call
Non-callable except for taxation reasons. Only applies to the 2022 bond: callable fixed income bond (determined
by the calculation agent).
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its principal subsidiaries. Relevant
indebtedness includes bonds, notes (including those under the ETMN Programme), or other securities that are, or
are capable of being, traded on any stock exchange or securities market (including OTC markets), but excluding
private placements. A principal subsidiary is defined as a subsidiary that is managed and controlled by the issuer
and whose total assets or operating income represent more than 15% of total consolidated assets or consolidated
operating income as calculated by reference to the then latest audited accounts.
Put
Only applies to the 2022 bond: puttable in whole at par on the early termination date. The date refers to any of the
interest payment dates falling on 13 November 2010, 13 November 2012, 13 November 2014, 13 November 2016,
13 November 2018 and 13 November 2020.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR20m.
Source: Company data, HSBC

367

abc

European Credit Research


Corporate Bond Covenants
September 2010

France Telecom
Bond
Coupon

Maturity

8.125%

Issuer

Guarantor

Out amt

Type

20 Nov 2028 France Telecom SA

None

GBP500m

Senior unsecured

8.125%

28 Jan 2033 France Telecom

None

EUR1500m

Senior unsecured

5.625%

23 Jan 2034 France Telecom

None

GBP500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its principal subsidiaries. Relevant
indebtedness includes bonds, notes (including those under the ETMN Programme), or other securities that are, or
are capable of being, traded on any stock exchange or securities market (including OTC markets), but excluding
private placements. A principal subsidiary is defined as a subsidiary that is managed and controlled by the issuer
and whose total assets or operating income represent more than 15% of total consolidated assets or consolidated
operating income as calculated by reference to the then latest audited accounts.
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR20m.
Source: Company data, HSBC

368

abc

European Credit Research


Corporate Bond Covenants
September 2010

France Telecom
Bond
Coupon

Maturity

5%

Issuer

Guarantor

Out amt

Type

22 Jan 2014 France Telecom SA

None

EUR1000m

Senior unsecured

5%

12 May 2016 France Telecom SA

None

GBP750m

Senior unsecured

3.875%

09 Apr 2020 France Telecom SA

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or any of its principal subsidiaries. Relevant
indebtedness includes bonds, notes (including those under the ETMN Programme), or other securities that are, or
are capable of being, traded on any stock exchange or securities market (including OTC markets), but excluding
private placements. A principal subsidiary is defined as a subsidiary that is managed and controlled by the issuer
and whose total assets or operating income represent more than 15% of total consolidated assets or consolidated
operating income as calculated by reference to the then latest audited accounts.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer on indebtedness exceeding EUR50m.
Source: Company data, HSBC

369

abc

European Credit Research


Corporate Bond Covenants
September 2010

OTE
Bond
Coupon

Maturity

3.75%

5%

Issuer

Guarantor

Out amt

Type

11 Nov 2011 OTE PLC

Hellenic
Telecommunications
Organization S.A.

EUR650m

Senior unsecured

05 Aug 2013 OTE PLC

Hellenic
Telecommunications
Organization S.A.

EUR1243m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer or the guarantor. Relevant debt includes bonds, notes,
debentures, debenture stock, loan stock or other securities that are, or are capable of being, traded on any stock
exchange or securities market (including OTC markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of USD17.5m.
Source: Company data, HSBC

370

abc

European Credit Research


Corporate Bond Covenants
September 2010

OTE
Bond
Coupon

Maturity

Issuer

4.625%

20 May 2016 OTE PLC

Guarantor

Out amt

Type

Hellenic
Telecommunications
Organization S.A.

EUR900m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or the guarantor. Relevant indebtedness includes
bonds, notes, debentures, debenture stock, loan stock or other instruments that are, or are capable of being, traded
on any stock exchange or securities market (including OTC markets).
Put
Put at par plus accrued interest if a change of control occurs (>50% stake by anyone other than the Hellenic
Republic) and any agency cuts to sub-investment grade (or any agency cuts by one notch if OTE is already subinvestment grade). This rating change must occur in the period beginning when a potential or actual change of
control is publicly announced and ending 120 days after the first announcement of the actual change of control.
Alternatively, the bonds are puttable if ratings are put on review 60-120 days after the first announcement of a
change of control and downgraded no more than 60 days later.
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR25m.
Source: Company data, HSBC

371

abc

European Credit Research


Corporate Bond Covenants
September 2010

OTE
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

14 Feb 2011 OTE PLC


5.375%
step up
(see "Other")

Hellenic
Telecommunications
Organization S.A.

EUR1443.996 Senior unsecured


m

6%

Hellenic
Telecommunications
Organization S.A.

EUR600m

12 Feb 2015 OTE PLC

Type

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer or guarantor. Relevant indebtedness includes bonds,
notes, debenture, debenture stock, loan stock, certificate or other securities that are, or are capable of being, traded
on any stock exchange or securities market (including OTC markets).
Put
Put at par plus accrued interest in the event of a change of control and a rating downgrade by Moody's, S&P, or
other equivalent agency within the change of control period. The period is defined as starting at the first public
announcement of the CoC or announcement of a potential CoC, which ever is the earlier, and ending 120 days after
the actual CoC has occurred. Alternatively, the bonds are puttable if the ratings are put on review within this period
and downgraded no more than 60 days after public announcement by either agency. A change of control is defined
as the direct or indirect acquisition (other than by the Hellenic Republic or entities directly or indirectly controlled by
the Hellenic Republic) of >50% of the issued capital or voting rights of the guarantor. A rating downgrade is defined
as a downgrade to non-investment grade, or if already below investment grade, a further downgrade of one or more
notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include cross-default of the issuer or any principal subsidiary on indebtedness exceeding EUR25m.
The coupon steps up by 125bp in the case of a rating downgrade to below Baa3 by Moody's or to below BBB- by
S&P. The coupon steps down by 125bp in the case of a subsequent rating upgrade by both agencies to at least
Baa3/BBB-.
Source: Company data, HSBC

372

abc

European Credit Research


Corporate Bond Covenants
September 2010

KPN
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.5%

21 Jul 2011

Koninklijke KPN N.V. None

EUR1425m

Senior unsecured

5%

13 Nov 2012 Koninklijke KPN NV

None

EUR1250m

Senior unsecured

4.5%

18 Mar 2013 Koninklijke KPN NV

None

EUR850m

Senior unsecured

6.25%

16 Sep 2013 Koninklijke KPN NV

None

EUR850m

Senior unsecured

6.25%

04 Feb 2014 Koninklijke KPN NV

None

EUR750m

Senior unsecured

4.75%

29 May 2014 Koninklijke KPN N.V. None

EUR650m

Senior unsecured

4%

22 Jun 2015 Koninklijke KPN NV

None

EUR1000m

Senior unsecured

6.5%

15 Jan 2016 Koninklijke KPN NV

None

EUR925m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the public debt of the issuer. Public debt includes bonds, notes, or other securities with an
initial life of minimum two years that are, or are capable of being, traded on any stock exchange or securities market
(including OTC markets).
Put
The put provision does not apply to the 2011 and 2015 bonds. Put at par plus accrued interest in the event of a
change of control and a rating downgrade by either agency within the change of control period. The period is defined
as ending 90 days after the CoC has occurred. A change of control is defined as the acquisition (indirectly or directly)
of >50% of the issued capital or the voting rights of the issuer. A rating downgrade is defined as a downgrade to noninvestment grade, or if already below investment grade, a downgrade of one or more notches, or a withdrawal of the
rating by Moody's and S&P.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of USD30m.
Source: Company data, HSBC

373

abc

European Credit Research


Corporate Bond Covenants
September 2010

KPN
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.75%

18 Mar 2016 Koninklijke KPN NV

None

GBP275m

Senior unsecured

4.75%

17 Jan 2017 Koninklijke KPN N.V. None

EUR1000m

Senior unsecured

7.5%

04 Feb 2019 Koninklijke KPN NV

None

EUR750m

Senior unsecured

6%

29 May 2019 Koninklijke KPN N.V. None

GBP250m

Senior unsecured

5.625%

30 Sep 2024 Koninklijke KPN N.V. None

EUR700m

Senior unsecured

5.75%

17 Sep 2029 Koninklijke KPN N.V. None

GBP850m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the public debt of the issuer. Public debt includes bonds, notes, or other securities with an
initial life of minimum two years that are, or are capable of being, traded on any stock exchange or securities market
(including OTC markets).
Put
Put at par plus accrued interest in the event of a change of control and a rating downgrade by either agency within
the change of control period. The period is defined as ending 90 days after the actual CoC has occurred. A change
of control is defined as the acquisition (indirectly or directly) of >50% of the issued capital or the voting rights of the
issuer. A rating downgrade is defined as a downgrade to non-investment grade, or if already below investment
grade, a further downgrade of one or more notches, or a withdrawal of the rating by Moody's and S&P.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of USD30m.
Source: Company data, HSBC

374

abc

European Credit Research


Corporate Bond Covenants
September 2010

NTT
Bond
Coupon

Maturity

Issuer

Guarantor

4.125%

09 Jun 2011 Nippon Telegraph and None


Telephone
Corporation

Out amt

Type

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the external Indebtedness of the issuer. External indebtedness includes bonds, notes,
debentures or other securities which either (a) are denominated/ payable in a currency other than yen, or more than
50% of principal is initially distributed outside Japan; (b) are not repayable within three years from the date of issue;
or (c) are, or are capable of being, quoted, listed or ordinarily traded on any stock exchange or on any over-thecounter securities market.
Put
None
Covenants
None
Other
Events of default include default of the issuer.
Source: Company data, HSBC

375

abc

European Credit Research


Corporate Bond Covenants
September 2010

Portugal Telecom
Bond
Coupon

Maturity

Issuer

Guarantor

3.75%

26 Mar 2012 Portugal Telecom


None
International Finance
B.V.

Out amt

Type

EUR1300m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the loan stock of the issuer, Portugal Telecom S.G.P.S., S.A or PT Communicacoes, S.A
apart from permitted securities. Loan stock includes bonds, notes, debentures, loan stock or other securities with an
original maturity of more than one year that are, or are capable of being, traded on any stock exchange or securities
market (including OTC markets), other than indebtedness where the majority is initially placed with Portuguese
investors. Permitted securities are defined as security interest over assets in case of a consolidation or merger in
accordance with normal market practice limited to the value of such assets.
Put
None
Covenants
None
Other
Events of default include cross default of the issuer, keep well provider or any relevant subsidiary, subject to a carve out
of USD20m. Relevant subsidiary is defined as a subsidiary whose turnover represents in excess of 10% of the
consolidated turnover of PT and its subsidiaries on a consolidated basis and by reference to the then latest annual
accounts.
Source: Company data, HSBC

376

abc

European Credit Research


Corporate Bond Covenants
September 2010

Portugal Telecom
Bond
Coupon

Maturity

4.375%

4.5%

Issuer

Guarantor

Out amt

Type

24 Mar 2017 Portugal Telecom


None
International Finance
B.V.

EUR500m

Senior unsecured

16 Jun 2025 Portugal Telecom


None
International Finance
B.V.

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the loan stock of the issuer, Portugal Telecom S.G.P.S., S.A or PT Communicacoes, S.A
apart from permitted securities. Loan stock includes bonds, notes, debentures, loan stock or other securities with an
original maturity of more than one year that are, or are capable of being, traded on any stock exchange or securities
market (including OTC markets), other than indebtedness where the majority is initially placed with Portuguese
investors. Permitted securities are defined as security interest over assets in case of a consolidation or merger in
accordance with normal market practice limited to the value of such assets.
Put
None
Covenants
None
Other
Events of default include default of the issuer, Portugal Telecom S.G.P.S., S.A or PT Communicacoes, S.A., subject
to a carve out of USD20m.
Source: Company data, HSBC

377

abc

European Credit Research


Corporate Bond Covenants
September 2010

Portugal Telecom
Bond
Coupon

Maturity

6%

5%

Issuer

Guarantor

Out amt

Type

30 Apr 2013 Portugal Telecom


None
International Finance
B.V.

EUR1000m

Senior unsecured

04 Nov 2019 Portugal Telecom


None
International Finance
B.V.

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the loan stock of the issuer, Portugal Telecom S.G.P.S., S.A or PT Communicacoes, S.A
apart from permitted securities. Loan stock includes bonds, notes, debentures, loan stock or other securities with an
original maturity of more than one year that are, or are capable of being, traded on any stock exchange or securities
market (including OTC markets), other than indebtedness where the majority is initially placed with Portuguese
investors. Permitted securities are defined as security interest over assets in case of a consolidation or merger in
accordance with normal market practice limited to the value of such assets.
Put
Put at par plus accrued interest in the event of a change of control and a rating downgrade by either agency within
the change of control period. The period is defined as commencing on the date of announcement and ending 120
days thereafter. A change of control is defined as the acquisition (indirectly or directly) of >50% of the issued capital
of the voting rights of the issuer excluding control by a holding company which are or are to be substantially similar to
the pre-existing shareholders of PT. A rating downgrade is defined as a downgrade to non-investment grade, or if
already below investment grade, a downgrade of one or more notches, or a withdrawal of the rating by Moody's and
S&P.
Covenants
None
Other
Events of default include cross default of the issuer, keep well provider or any relevant subsidiary, subject to a carve out
of USD20m. Relevant subsidiary is defined as a subsidiary whose turnover represents in excess of 10% of the
consolidated turnover of PT and its subsidiaries on a consolidated basis and by reference to the then latest annual
accounts.
Source: Company data, HSBC

378

abc

European Credit Research


Corporate Bond Covenants
September 2010

SES Global
Bond
Coupon

Maturity

4%

Issuer

Guarantor

Out amt

Type

15 Mar 2011 SES Global SA

SES Global Americas


Holdings GP

EUR650m

Senior unsecured

4.375%

21 Oct 2013 SES Global SA

SES Global Americas


Holdings GP

EUR500m

Senior unsecured

4.875%

09 Jul 2014

EUR650m

Senior unsecured

4.625%

09 Mar 2020 SES S.A.

EUR650m

Senior unsecured

SES Global Americas SES S.A.


Holdings GP
SES Global Americas
Holdings GP

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer, the guarantor or any of its subsidiaries (issuer or
guarantor holds or controls majority of voting rights or has the right to appoint or remove majority of board of directors).
Relevant indebtedness includes bonds, notes, debentures, debenture stock, loan stock or other securities that are, or are
capable of being, quoted, listed or ordinarily dealt in on any stock exchange or securities market (including OTC
markets).
Put
Put at par plus accrued interest if a change of control occurs (>50% stake of the guarantor and pro rata shareholder
interests are not substantially the same) and either Moody's or S&P cuts to non-investment grade within 120 days (or
either agency cuts by one notch if SES is already non-investment grade).
Covenants
None
Other
Events of default include default of the issuer, the guarantor or any subsidiary, subject to a carve out of EUR50m.
Source: Company data, HSBC

379

abc

European Credit Research


Corporate Bond Covenants
September 2010

SFR
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

3.375%

18 Jul 2012

SFR SA

None

EUR1000m

Senior unsecured

5%

09 Jul 2014

SFR SA

None

EUR300m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer. Relevant debt includes bonds, notes, debentures, loan stock
or other securities that are, or are intended to be, quoted, listed or ordinarily dealt in on any stock exchange or
securities market (including over-the-counter market).
Put
None
Covenants
None
Other
Events of default include default of the issuer subject to a carve out of EUR30m.
Source: Company data, HSBC

380

abc

European Credit Research


Corporate Bond Covenants
September 2010

SingTel
Bond
Coupon

Maturity

Issuer

Guarantor

21 Nov 2011 Singapore


None
6%
step up
Telecommunications
(see "Other")
Limited

Out amt

Type

EUR500m

Senior unsecured

Call
Callable reference comparable German Bund + 40bp. Also callable for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer and principal subsidiaries. Capital market
indebtedness means any debt in the form of bonds, notes, debentures, loan stock or other securities that are, or are
capable of being, quoted, listed or ordinarily dealt with in any stock exchange, or other securities market (including
OTC), having a maturity of more than 1 year. Principal subsidiary means a subsidiary with operating profit or total
assets at least 15% of the group consolidated total as calculated by reference to the then latest audited accounts.
Put
None
Covenants
None
Other
Events of default include default of the issuer or any of its principal subsidiaries, subject to a carve out of USD100m.
The coupon steps up by 25bp per notch and per rating agency following a rating downgrade to below A3 by Moody's
or to below A- by S&P. The coupon steps down by 25bp per notch and per rating agency following subsequent
upgrades. The step up/step down will accrue from the next interest payment date.
Source: Company data, HSBC

381

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telecom Corporation of New Zealand


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.625%

14 May 2018 TCNZ Finance Ltd

Telecom Corporation of GBP125m


New Zealand Limited,
Telecom Investments
Limited, Telecom New
Zealand Limited,
Telecom Pacific Limited
and TCNZ Australia
Investments Pty Limited

Senior unsecured

5.75%

06 Apr 2020 TCNZ Finance Ltd

Telecom Corporation of GBP150m


New Zealand Limited,
Telecom Investments
Limited, Telecom New
Zealand Limited,
Telecom Pacific Limited
and TCNZ Australia
Investments Pty Limited

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers indebtedness or liabilities (direct or contingent) of the issuer and guaranteeing subsidiaries.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantors, subject to a carve out of NZD10m.
Source: Company data, HSBC

382

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telecom Italia
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.5%

28 Jan 2011 Telecom Italia S.p.A

None

EUR750m

Senior unsecured

6.75%

21 Mar 2013 Telecom Italia S.p.A. None

EUR650m

Senior unsecured

7.875%

22 Jan 2014 Telecom Italia S.p.A. None

EUR500m

Senior unsecured

4.75%

19 May 2014 Telecom Italia S.p.A. None

EUR673m

Senior unsecured

5.625%

29 Dec 2015 Telecom Italia S.p.A. None

GBP500m

Senior unsecured

8.25%

21 Mar 2016 Telecom Italia S.p.A. None

EUR850m

Senior unsecured

7.375%

15 Dec 2017 Telecom Italia S.p.A. None

GBP750m

Senior unsecured

5.375%

29 Jan 2019 Telecom Italia S.p.A

EUR1250m

Senior unsecured

6.375%

24 Jun 2019 Telecom Italia S.p.A. None

GBP850m

Senior unsecured

5.25%

10 Feb 2022 Telecom Italia S.p.A. None

EUR1250m

Senior unsecured

5.875%

19 May 2023 Telecom Italia S.p.A. None

GBP400m

Senior unsecured

5.25%

17 Mar 2055 Telecom Italia S.p.A. None

EUR670m

Senior unsecured

None

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer and the guarantor, subject of a carve out of
EUR1bn. The definition excludes a number of permitted encumbrances. These include (a) liens existing at the time
of the issuance of the notes, (b) encumbrances created to secure loans provided by governmental agencies, (c)
encumbrances created in the ordinary course of business and (d) project finance indebtedness. Capital market
indebtedness includes bonds, notes or other securities that are, or are capable of being, traded on any stock
exchange or securities market, but excludes asset-backed-securities originated by the issuer or guarantor.
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR100m.
Source: Company data, HSBC

383

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telecom Italia
Bond
Coupon

Maturity

Issuer

Out amt

Type

20 Apr 2011 Telecom Italia Finance Telecom Italia S.p.A


7.5%
step up
SA
(see "Other")
(originally Sogerim SA)

EUR1909m

Senior unsecured

6.25%

EUR1250m

Senior unsecured

01 Feb 2012 Telecom Italia S.p.A

Guarantor

None

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the capital market indebtedness of the issuer and Sogerim S.A., subject to a carve out of
10% of total net worth in the most recent audited consolidated balance sheet of the issuer. The definition excludes a
number of permitted encumbrances. These include (a) liens existing at the time of the issuance of the notes, (b)
encumbrances created to secure loans provided by governmental agencies, (c) encumbrances created by the
ordinary business and (d) asset-backed financing or securitisation transactions. Capital market indebtedness
includes bonds, notes or other securities that are, or are capable of being, traded on any stock exchange or
securities market, but excludes asset-backed-securities originated by the issuer or guarantor.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor (if issued by Telecom Italia Finance), subject to a
carve out of EUR50m. The documentation includes defeasance language. Applies to the 2011 bond only: coupon
steps up by 25bp per notch and per rating agency following the downgrade of the rating ascribed to Telecom Italia's
senior unsecured debt to below Baa1 by Moody's or to below BBB+ by S&P. The coupon steps down by 25bp per
notch and per rating agency as a result of subsequent upgrades. The step up/step down will accrue from the next
interest payment date.
Source: Company data, HSBC

384

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telecom Italia
Bond
Coupon

Maturity

7.25%

Issuer

Guarantor

Out amt

Type

24 Apr 2012 Telecom Italia Finance Telecom Italia S.p.A


SA (originally Olivetti
Finance NV)

EUR1000m

Senior unsecured

6.875%

24 Jan 2013 Telecom Italia Finance Telecom Italia S.p.A


SA (originally Olivetti
Finance NV)

EUR850m

Senior unsecured

7.75%

24 Jan 2033 Telecom Italia Finance Telecom Italia S.p.A


SA (originally Olivetti
Finance NV)

EUR1015m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer, the guarantor or any of its material subsidiaries. Relevant
debt includes bonds, notes, debentures, debenture stock, loan stock or other securities with an original maturity of
more than one year that are, or are capable of being, traded on any stock exchange or securities market (including
OTC markets). Material subsidiaries are defined as subsidiaries with revenues or net assets higher than 10% of
consolidated revenues or net assets in the most recent audited financial statements.
Put
None
Covenants
None
Other
Events of default include default of the issuer, the guarantor or subsidiary (cross default), subject to a carve out of
EUR25m. A subsidiary is defined as a company fully consolidated or controlled by the issuer or guarantor.
Source: Company data, HSBC

385

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telefonica
Bond
Coupon

Maturity

3.75%

Issuer

Guarantor

Out amt

Type

02 Feb 2011 Telefonica Emisiones Telefonica S.A.


SAU

EUR2250m

Senior unsecured

5.125%

14 Feb 2013 Telefonica Europe


B.V.

Telefonica S.A.

EUR1500m

Senior unsecured

4.375%

02 Feb 2016 Telefonica Emisiones Telefonica S.A.


SAU

EUR1750m

Senior unsecured

5.375%

02 Feb 2018 Telefonica Emisiones Telefonica S.A.


SAU

GBP750m

Senior unsecured

5.375%

02 Feb 2026 Telefonica Emisiones Telefonica S.A.


SAU

GBP500m

Senior unsecured

5.875%

14 Feb 2033 Telefonica Europe


B.V.

EUR500m

Senior unsecured

Telefonica S.A.

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and the guarantor, unless (a) the Indebtedness was
originally offered to residents of Spain or the Netherlands (if issued by Telefonica Europe B.V.), (b) matures within
one year, (c) the encumbrance affects assets of an entity without any relationship to the issuer or the guarantor
which was acquired or (d) the indebtedness does not exceed 5% of consolidated net tangible assets. Relevant
indebtedness covers bonds, notes or other securities that are, or are capable of being, quoted, listed, dealt in or
traded on any stock exchange or securities market, but excludes any off-balance sheet obligations.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR50m.
Source: Company data, HSBC

386

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telefonica
Bond
Coupon

Maturity

4.393%

Issuer

Guarantor

Out amt

Type

17 Apr 2012 Telefonica Emisiones Telefonica S.A.


SAU

EUR500m

Senior unsecured

5.58%

12 Jun 2013 Telefonica Emisiones Telefonica S.A.


SAU

EUR1250m

Senior unsecured

5.888%

31 Jan 2014 Telefonica Emisiones Telefonica S.A.


SAU

GBP500m

Senior unsecured

5.431%

03 Feb 2014 Telefonica Emisiones Telefonica S.A.


SAU

EUR2000m

Senior unsecured

4.674%

07 Feb 2014 Telefonica Emisiones Telefonica S.A.


SAU

EUR1500m

Senior unsecured

3.406%

24 Mar 2015 Telefonica Emisiones Telefonica SA


SAU

EUR1400m

Senior unsecured

5.496%

01 Apr 2016 Telefonica Emisiones Telefonica S.A.


SAU

EUR1500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and the guarantor, unless (a) the indebtedness was
originally offered to residents of Spain or the Netherlands (if issued by Telefonica Europe B.V.), (b) matures within
one year, (c) the encumbrance affects assets of an entity without any relationship to the issuer or the guarantor
which was acquired, or (d) the indebtedness does not exceed 5% of consolidated net tangible assets. Relevant
indebtedness covers bonds, notes or other securities that are, or are capable of being, quoted, listed, dealt in or
traded on any stock exchange or securities market, but excludes any off-balance sheet obligations.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR100m or its equivalent in
any other currency
Source: Company data, HSBC

387

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telefonica
Bond
Coupon

Maturity

4.693%
5.289%

Issuer

Guarantor

Out amt

Type

11 Nov 2019 Telefonica Emisiones Telefonica SA


SAU

EUR1750m

Senior unsecured

09 Dec 2022 Telefonica Emisiones Telefonica SA


SAU

GBP650m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and the guarantor, unless (a) the indebtedness was
originally offered to residents of Spain or the Netherlands (if issued by Telefonica Europe B.V.), (b) matures within
one year, (c) the encumbrance affects assets of an entity without any relationship to the issuer or the guarantor
which was acquired, or (d) the indebtedness does not exceed 5% of consolidated net tangible assets. Relevant
indebtedness covers bonds, notes or other securities that are, or are capable of being, quoted, listed, dealt in or
traded on any stock exchange or securities market, but excludes any off-balance sheet obligations.
Put
None
Covenants
None
Other
Events of default include default of the issuer or the guarantor, subject to a carve out of EUR100m or its equivalent in
any other currency
Source: Company data, HSBC

388

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telefonica
Bond
Coupon

Maturity

Issuer

25 Jan 2012 mmO2 plc


7.625%
step up
(see "Other")

Guarantor

Out amt

Type

None

GBP375m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and the guarantor, unless (a) the indebtedness was
originally offered to residents of Spain or the Netherlands (if issued by Telefonica Europe B.V.), (b) matures within
one year, (c) the encumbrance affects assets of an entity without any relationship to the issuer or the guarantor
which was acquired or (d) the indebtedness does not exceed 5% of consolidated net tangible assets. Relevant
indebtedness covers bonds, notes or other securities that are, or are capable of being, quoted, listed, dealt in or
traded on any stock exchange or securities market, but excludes any off-balance sheet obligations.
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of GBP25m. The coupon steps up by 150bp in
the case of a rating downgrade to below Baa3 by Moody's or to below BBB- by S&P. The coupon steps down by
150bp in the case of a subsequent rating upgrade by both agencies to at least Baa3/BBB-. The step up/step down
will accrue from the next interest payment date.
Source: Company data, HSBC

389

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telekom Austria
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5%

22 Jul 2013

Telekom
Finanzmanagement
GmbH

Telekom Austria AG

EUR750m

Senior unsecured

4.25%

27 Jan 2017 Telekom


Finanzmanagement
GmbH

Telekom Austria AG

EUR500m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the public debt of the issuer, the guarantor or any of its material subsidiaries. Public debt
includes bonds, notes, debentures, loan stock or other securities that are, or are intended to be, quoted, listed,
ordinarily dealt in or traded on any stock exchange or securities market (including OTC markets). A material
subsidiary is defined as (a) a subsidiary of the issuer or the guarantor with gross revenues or total assets of more
than 10% of total consolidated gross revenues or consolidated total assets in the latest audited consolidated
accounts, or (b) with gross revenues and/or total assets representing originally less than 10%, but standing above
this threshold when aggregated with one or more non-material subsidiaries.
Put
None
Covenants
None
Other
Events of default include default of the issuer, guarantor or any its principal subsidiaries, subject to a carve out of
EUR25m. A principal subsidiary is defined as a subsidiary of the issuer or the guarantor with gross revenues or total
assets representing more than 10% of total consolidated gross revenues or consolidated total assets in the latest
audited consolidated accounts.
Source: Company data, HSBC

390

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telenor
Bond
Coupon

Maturity

4.5%

Issuer

Guarantor

Out amt

Type

28 Mar 2014 Telenor ASA

None

EUR500m

Senior unsecured

4.875%

29 May 2017 Telenor ASA

None

EUR1000m

Senior unsecured

4.125%

26 Mar 2020 Telenor ASA

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the issuer (or any of its principal subsidiaries in the case of the 2012
bonds). Relevant debt includes any securities that are, or are capable of being, traded on any stock exchange or
securities market (including over-the-counter market). A principal subsidiary is defined as a subsidiary of the issuer
with net profit before interest and taxation or assets representing at least 15% of total consolidated net profit before
interest and taxation or consolidated total assets in the most recent audited financial statements.
Put
Put at par plus accrued interest if a change of control occurs (>50% stake) and either agency cuts to sub-investment
grade within 180 days (or either agency cuts by one notch if Telenor is already sub-investment grade).
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR75m.
Source: Company data, HSBC

391

abc

European Credit Research


Corporate Bond Covenants
September 2010

TeliaSonera
Bond
Coupon

Maturity

3.625%
4.125%

Issuer

Guarantor

Out amt

Type

09 May 2012 TeliaSonera AB

None

EUR500m

Senior unsecured

11 May 2015 TeliaSonera AB

None

EUR750m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the public debt of the issuer. Public debt includes bonds, notes, debentures, loan stock or
other securities that are, or are intended to be, quoted, listed, ordinarily dealt in or traded on any stock exchange or
securities market (including OTC markets).
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR50m.
Source: Company data, HSBC

392

abc

European Credit Research


Corporate Bond Covenants
September 2010

TeliaSonera
Bond
Coupon

Maturity

5.125%

Issuer

Guarantor

Out amt

Type

13 Mar 2014 TeliaSonera AB

None

EUR550m

Senior unsecured

4.75%

07 Mar 2017 TeliaSonera AB

None

EUR750m

Senior unsecured

4.75%

16 Nov 2021 TeliaSonera AB

None

EUR600m

Senior unsecured

Call
Tax call and clean-up call (see put provision).
Negative pledge
Negative pledge covers the public debt of the issuer. Public debt includes bonds, notes, debentures, loan stock or
other securities that are, or are intended to be, quoted, listed, ordinarily dealt in or traded on any stock exchange or
securities market (including OTC markets), and which has an initial life >2yrs and is payable in a currency other than
Swedish kroner (or is payable in Swedish kroner and >50% was initially offered outside Sweden).
Put
Put at par plus accrued interest in the event of a change of control and a negative rating change by S&P or Moody's
within the change of control period. The period is defined as ending 90 days after the CoC occurs or is publicly
announced. A change of control is defined as the acquisition (indirectly or directly) of >50% of the share capital or
voting rights of the issuer. A negative rating change is defined as a downgrade to non-investment grade, or if already
below investment grade, a downgrade of one or more notches, or a withdrawal of the rating. The issuer has a cleanup call if 80% or more of the bonds have been tendered following the activation of the clause.
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of EUR50m.
Source: Company data, HSBC

393

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telstra
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

08 Apr 2013 Telstra Corporation


6%
Ltd.
step up
(see "Other")

None

EUR500m

Senior unsecured

4.75%

21 Mar 2017 Telstra Corp Ltd

None

EUR1000m

Senior unsecured

4.25%

23 Mar 2020 Telstra Corporation


Ltd.

None

EUR1000m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer. Relevant indebtedness includes notes, bonds,
debentures or other similar debt instruments that are, or are capable of being, listed, quoted, ordinarily dealt in or
traded on any stock exchange or securities market (including over-the-counter market).
Put
None
Covenants
None
Other
Events of default include cross default of issuer of indebtedness in excess of AUD50m. The coupon steps up by
150bps if a change of control and negative rating change occurs during the CoC period.
Source: Company data, HSBC

394

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telstra
Bond
Coupon

Maturity

6.375%

Issuer

Guarantor

Out amt

Type

29 Jun 2011 Telstra Corporation


Ltd.

None

EUR1500m

Senior unsecured

4.75%

15 Jul 2014

Telstra Corporation
Ltd.

None

EUR500m

Senior unsecured

6.125%

06 Aug 2014 Telstra Corporation


Ltd.

None

GBP200m

Senior unsecured

3.875%

24 Jul 2015

None

EUR500m

Senior unsecured

Telstra Corp Ltd

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the indebtedness of the issuer. Indebtedness includes bonds, notes, debentures or other
securities that are, or are capable of being, listed, quoted, ordinarily dealt in or traded on any stock exchange or
securities market (including over-the-counter market).
Put
None
Covenants
None
Other
Events of default include default of the issuer, subject to a carve out of AUD50m. Step up only applies to the 2011
bond: the coupon steps up by 25bp in the case of a rating downgrade to A3 by Moody's or to A- by S&P. The coupon
steps up by another 25bp in the case of a rating downgrade to Baa1 or below by Moody's and to BBB+ or below by
S&P. The coupon steps down according to the same mechanism. The step up/step down adjustments are effective
two days after the rating action.
Source: Company data, HSBC

395

abc

European Credit Research


Corporate Bond Covenants
September 2010

Telekom Polska
Bond
Coupon

Maturity

Issuer

6%

22 May 2014 TPSA Eurofinance


France SA

Guarantor

Out amt

Telekomunikacja Polska EUR700m


S.A.

Type
Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
Negative pledge covers the relevant debt of the guarantor or any of its material subsidiaries. Relevant debt includes
bonds, notes, debentures, debenture stock, loan stock or other securities with an original maturity of more than one
year that are, or are capable of being, traded on any stock exchange or securities market (including OTC markets).
Material subsidiaries are defined as subsidiaries with revenues or net assets higher than 10% of consolidated
turnover or net assets in the most recent audited financial statements.
Put
None
Covenants
None
Other
Events of default include cross default of the issuer, guarantor or material subsidiary, subject to a carve out of
EUR50m. Material subsidiaries are defined as subsidiaries with revenues or net assets higher than 10% of
consolidated turnover or net assets in the most recent audited financial statements.
Source: Company data, HSBC

396

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vodafone
Bond
Coupon

Maturity

3.625%

Issuer

Guarantor

Out amt

Type

29 Nov 2012 Vodafone Group plc

None

EUR1250m

Senior unsecured

6.875%

04 Dec 2013 Vodafone Group plc

None

EUR1000m

Senior unsecured

4.625%

08 Sep 2014 Vodafone Group plc

None

GBP875m

Senior unsecured

5.125%

10 Apr 2015 Vodafone Group plc

None

EUR500m

Senior unsecured

6.25%

15 Jan 2016 Vodafone Group plc

None

EUR1250m

Senior unsecured

4.75%

14 Jun 2016 Vodafone Group plc

None

EUR500m

Senior unsecured

5.375%

05 Dec 2017 Vodafone Group plc

None

GBP600m

Senior unsecured

5%

04 Jun 2018 Vodafone Group plc

None

EUR750m

Senior unsecured

8.125%

26 Nov 2018 Vodafone Group plc

None

GBP450m

Senior unsecured

4.65%

20 Jan 2022 Vodafone Group plc

None

EUR1250m

Senior unsecured

5.375%

06 Jun 2022 Vodafone Group plc

None

EUR500m

Senior unsecured

5.625%

04 Dec 2025 Vodafone Group plc

None

GBP250m

Senior unsecured

5.9%

26 Nov 2032 Vodafone Group plc

None

GBP450m

Senior unsecured

Call
Non-callable except for taxation reasons.
Negative pledge
None
Put
None
Covenants
None
Other
Events of default include cross default of issuer on any indebtedness for borrowed money exceeding GBP50m
(occurring on or before 1 August 2014) and GBP150m (occurring after 1 August 2014).
Source: Company data, HSBC

397

European Credit Research


Corporate Bond Covenants
September 2010

398

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Utilities

399

European Credit Research


Corporate Bond Covenants
September 2010

400

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Electric

401

abc

European Credit Research


Corporate Bond Covenants
September 2010

A2A
Bond
Coupon

Maturity

Issuer

4.875%

30 Oct 2013 A2A SpA

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, which includes bonds, notes, debentures, debenture
stock, loan stock, or other instruments which are quoted, listed or ordinarily dealt on any stock exchange or over-thecounter or other securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or any material subsidiary for obligations exceeding EUR15m. A
material subsidiary is defined as a subsidiary that represents 10% or more of the consolidated revenues or assets.
Source: Company data, HSBC

402

abc

European Credit Research


Corporate Bond Covenants
September 2010

A2A
Bond
Coupon

Maturity

Issuer

4.875%

28 May 2014 A2A SpA

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any subsidiary, which includes bonds, notes,
debentures, debenture stock, loan stock, or other securities which are quoted, listed or ordinarily dealt on any stock
exchange or over-the-counter or other securities market. A subsidiary is defined as one that is controlled by majority
of votes or under dominant influence of the parent.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or any material subsidiary for obligations exceeding EUR15m. A
material subsidiary is defined as one whose revenues or assets represent 5% or more of the consolidated revenues
or assets.
Source: Company data, HSBC

403

abc

European Credit Research


Corporate Bond Covenants
September 2010

A2A
Bond
Coupon

Maturity

Issuer

4.5%

02 Nov 2016 A2A SpA

Guarantor

Out amt

Type

None

EUR1000m

Senior unsecured

Call
Tax call
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any material subsidiary, which includes any notes,
bonds, debentures, debenture stock, loan stock or other instruments which are, or are capable of being, quoted,
listed or ordinarily dealt in on any stock exchange, OTC or other securities market.
Put
None
Covenants
None
Other
Events of default cover debt of the issuer and its material subsidiaries, with amounts of no less than EUR30m.
Material subsidiary is defined as any subsidiary whose total assets or net revenues represent not less than 10% of
total assets/ net revenues of the group.
Source: Company data, HSBC

404

abc

European Credit Research


Corporate Bond Covenants
September 2010

Acea
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.875%

23 Jul 2014

Acea SpA

None

EUR300m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any material subsidiary, which includes bonds,
notes, debentures, or other securities which are quoted, listed or ordinarily dealt on any stock exchange or over-thecounter or other securities market. A material subsidiary is defined as one whose revenues or assets represent 10%
or more of the consolidated revenues or assets.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or any material subsidiary for obligations exceeding EUR15m. A
material subsidiary is defined as one whose revenues or assets represent 10% or more of the consolidated revenues
or assets.
Source: Company data, HSBC

405

abc

European Credit Research


Corporate Bond Covenants
September 2010

Acea
Bond
Coupon

Maturity

Issuer

4.5%

16 Mar 2020 Acea SpA

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Tax call. Issuer call: at the greater of par or the sum of the then-current values of the remaining scheduled payments
of principal and interest on the note, discounted to the optional redemption date on an annual basis (based on the
actual number of days elapsed divided by 365 or (in the case of a leap year) 366) at the mid-market annual swap
rate, as determined by the reference dealers.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any material subsidiary, which includes bonds,
notes, debentures or other securities which for the time being are, are intended to be (with the consent of the issuer),
or are capable of being, quoted, listed or dealt in or traded on any stock exchange or OTC or other securities market.
Put
None
Covenants
None
Other
Events of default cover debt of the issuer or any of its material subsidiaries of no less than EUR15m (or its equivalent
in other currencies). A material subsidiary is defined as one whose revenues or assets represent 10% or more of the
consolidated revenues or assets.
Source: Company data, HSBC

406

abc

European Credit Research


Corporate Bond Covenants
September 2010

Alliander
Bond
Coupon

Maturity

4%

Issuer

Guarantor

Out amt

Type

20 Apr 2012 Alliander Finance B.V. Alliander N.V.

EUR500m

EMTN sr unsecured

4.125%

17 Dec 2014 Alliander Finance B.V. Alliander N.V.

EUR500m

Senior unsecured

5.5%

20 Apr 2016 Alliander Finance B.V. Alliander N.V.

EUR750m

EMTN sr unsecured

4.5%

17 Dec 2019 Alliander Finance B.V. Alliander N.V.

EUR300m

Senior unsecured

Call
Tax call.
Negative pledge
Covers relevant indebtedness of the issuer, guarantor and material subsidiaries but excludes bank debt. Relevant
indebtedness is defined as bonds, notes, debentures, debenture stock, loan stock or other securities listed or dealt
over the counter.
Put
None
Covenants
None
Other
Events of default include cross-default on issuer, guarantor, material subsidiary with a EUR50m carve-out. Material
subsidiary is any subsidiary of the guarantor whose net turnover constitutes not less than 10% of the consolidated
total net turnover of the group as a whole.
Source: Company data, HSBC

407

abc

European Credit Research


Corporate Bond Covenants
September 2010

CE Electric
Bond
Coupon

Maturity

Issuer

9.25%

17 Jan 2020 Yorkshire Electricity


Distribution Plc

Guarantor

Out amt

Type

Yorkshire Electricity
Group Plc

GBP200m

Senior unsecured

Call
Spens call reference UKT 8.75% 2017.
Negative pledge
Negative pledge for public debt, private placements of issuer & PES subsidiary only. Excludes project finance
indebtedness of excluded subs. Also excluded is debt with maturity after 17 January 2020 and with aggregate
principal not more than the greater of GBP200m and 20% of capital and reserves.
Put
Puttable on occurrence of a put event (restructuring event, ie, loss or significant modification of PES licence,
termination of pooling agreement without equivalent replacement or termination of DTI/DGES role) AND downgrade
to below investment grade. Restructuring period is defined as 90 days.
Covenants
None
Other
Events of default include cross-defaults of principal subsidiaries, defined as subsidiary of the issuer whose net profits
before tax or gross assets represent 20% or more of the consolidated net profits before tax of the group of
consolidated gross assets of the group (with reference to the last published audited financial statements).
Source: Company data, HSBC

408

abc

European Credit Research


Corporate Bond Covenants
September 2010

CE Electric
Bond
Coupon

Maturity

Issuer

7.25%

15 Dec 2022 CE Electric UK


Funding Co

Guarantor

Out amt

Type

AMBAC Insurance

GBP200m

Senior unsecured

Call
Spens call reference UKT 8% 2021.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any PES subsidiary, which includes bonds, notes,
debentures, debenture stock, loan stock, or other securities which are listed, quoted or traded on any stock
exchange or over-the-counter or other securities market. Excludes debt that has initial maturity of 31 December 2022
or later and an aggregate amount not exceeding the greater of GBP200m and 20% of capital and reserves, as well
as project finance indebtedness. A PES subsidiary is defined as any subsidiary that undertakes any part of the
groups distribution business under the Electricity Act.
Put
A put event occurs when there is an AMBAC event of default followed by a restructuring event, and there is a rating
downgrade or negative rating event. An AMBAC event of default includes defaults on payments, inability to pay or
AMBAC challenging its obligations as guarantor. A restructuring event includes loss or modification of PES licence,
termination of the pooling and settlement agreement, or any legislation removing the Secretary of State for Trade
and Industry and/or Director General of Electricity Supply from their duties. A rating downgrade is lowering the rating
from investment grade to non-investment grade or, if the rating is already non-investment grade, then lowering the
rating by one further category. A negative rating event occurs when the issuer is unable to obtain an investment
grade rating or does not seek to obtain a rating.
Covenants
The issuer will only declare, recommend, make or pay any dividend to any shareholder if: (a) no issuer event of
default has occurred and is continuing or will arise as a result of this dividend; and (b) either (i) the issuers leverage
ratio does not exceed 0.62 and the issuers interest coverage ratio is not less than 2.2; or (ii) the issuers senior
unsecured long-term debt is rated at least BBB/Baa2 by S&P and Duff & Phelps and Moodys.
Other
Events of default include cross-default of Issuer or any principal subsidiary for obligations exceeding the greater of
GBP25m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax and exceptional items or net assets represent more than 20% of the consolidated profits
on ordinary activities before tax and exceptional items or consolidated net assets, as calculated in the latest audited
financial statements. It is also an event of default if the issuer ceases to own directly or indirectly 51% or more of
Northern Electric Plc.
Source: Company data, HSBC

409

abc

European Credit Research


Corporate Bond Covenants
September 2010

CE Electric
Bond
Coupon

Maturity

Issuer

7.25%

04 Aug 2028 Yorkshire Power


Finance Limited

Guarantor

Out amt

Yorkshire Power Group GBP200m


Limited

Type
Senior unsecured

Call
Spens call reference UKT 7.25% 2007
Negative pledge
Negative pledge for public debt & private placements of issuer, guarantor & PES subsidiary only. Excludes project
finance indebtedness of excluded subs. Also excluded is debt with maturity after 4 August 2028 and with aggregate
principal not more than the greater of GBP200m and 20% of capital and reserves.
Put
Puttable on occurrence of a put event (loss or significant modification of PES licence, termination of pooling agreement
without equivalent replacement or termination of DTI/DGES role) AND downgrade to below investment grade.
Covenants
None
Other
Events of default include a) failure of guarantor to continue to own directly or indirectly at least 51% of Yorkshire
Electricity Group. Also cross-defaults of principal subsidiaries, defined as a subsidiary of the issuer whose net profits
before tax or gross assets represent 20% or more of the consolidated net profits before tax of the group of
consolidated gross assets of the group (with reference to the last published audited financial statements).
Source: Company data, HSBC

410

abc

European Credit Research


Corporate Bond Covenants
September 2010

CEZ
Bond
Coupon

Maturity

Issuer

4.125%

17 Oct 2013 CEZ a.s.

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers the indebtedness of the issuer and material subsidiaries over principal property.
Indebtedness; this includes public debt, loans and any borrowed money. The issuer can enter sale and leaseback
transactions as long as their outstanding amount is no higher than 10% of consolidated net tangible assets plus 20%
of consolidated net tangible assets; debt denominated in Czech korunas is excluded from the definition. Material
subsidiaries are subsidiaries whose total assets or gross revenues account for more than 10% of consolidated total
assets of gross revenues as the case may be. Principal property includes generation, transmission or distribution
assets located in the Czech Republic.
Put
None
Covenants
None
Other
Event of default covers the debt of the issuer and its subsidiaries, subject to a USD30m carve-out. Material change
in business, ie the issuer ceases to be able to generate and sell electricity.
Source: Company data, HSBC

411

abc

European Credit Research


Corporate Bond Covenants
September 2010

CEZ
Bond
Coupon

Maturity

5.125%
6%

Issuer

Guarantor

Out amt

Type

12 Oct 2012 CEZ a.s.

None

EUR500m

EMTN Sr unsecured

18 Jul 2014

None

EUR600m

EMTN Sr unsecured

CEZ a.s.

Call
Tax call.
Negative pledge
Negative pledge covers the indebtedness of the issuer and material subsidiaries over principal property.
Indebtedness includes public debt, loans and any borrowed money. The issuer can enter sale and leaseback
transactions as long as their outstanding amount is no higher than 10% of consolidated net tangible assets (other
than debt denominated in Czech korunas) or 30% of consolidated net tangible assets (with the inclusion of debt
denominated in Czech korunas). Material subsidiaries are subsidiaries of the issuer whose total assets or gross
revenues account for more than 10% of consolidated total assets of gross revenues as the case may be. Principal
property includes generation, transmission or distribution assets located in the Czech Republic.
Put
Put at par in the occurrence of a put event. A put event occurs when there is a change of control followed by a rating
downgrade by Moodys or S&P within the change of control period (180 days of a public announcement of change of
control). A change of control is defined by the acquisition (indirectly or directly) of or more than 50% of the
issued/allotted ordinary share capital or the total voting rights of the issuer. A rating downgrade is defined as a
downgrade to non-investment grade, or, if already below investment grade, a further downgrade of one or more
notches, or a withdrawal of the rating. It also applies where no credit rating was assigned by the rating agencies and
this continues to be case during the CoC period.
Covenants
None
Other
Events of default covers debt of the issuer and its subsidiaries for indebtedness exceeding USD30m. Subsidiary means
any firm in which the issuer owns/controls, directly or indirectly, more than 50% of the issued share capital or voting rights.
Source: Company data, HSBC

412

abc

European Credit Research


Corporate Bond Covenants
September 2010

CEZ
Bond
Coupon

Maturity

5.75%

Issuer

Guarantor

Out amt

Type

26 May 2015 CEZ a.s.

None

EUR600m

EMTN Sr unsecured

4.5%

29 Jun 2020 CEZ a.s.

None

EUR500m

EMTN Sr unsecured

5%

19 Oct 2021 CEZ a.s.

None

EUR750m

EMTN Sr unsecured

4.875%

16 Apr 2025 CEZ a.s.

None

EUR750m

EMTN Sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers the indebtedness of the issuer and material subsidiaries over principal property.
Indebtedness includes public debt, loans and any borrowed money. The issuer can enter sale and leaseback
transactions, as long as their outstanding amount is no higher than 10% of consolidated net tangible assets (other
than debt denominated in Czech korunas) or 30% of consolidated net tangible assets (with the inclusion of debt
denominated in Czech korunas). Material subsidiaries are subsidiaries of the issuer whose total assets or gross
revenues account for more than 10% of consolidated total assets or gross revenues as the case may be. Principal
property includes generation, transmission or distribution assets located in the Czech Republic.
Put
Put at par in the occurrence of a put event. A put event occurs when there is a change of control followed by a rating
downgrade by Moodys or S&P within the change of control period (180 days of a public announcement of change of
control). A change of control is defined by the acquisition (indirectly or directly) of or more than 50% of the
issued/allotted ordinary share capital or the total voting rights of the issuer. A rating downgrade is defined as a
downgrade to non-investment grade, or, if already below investment grade, a further downgrade of one or more
notches, or a withdrawal of the rating. It also applies where no credit rating was assigned by the rating agencies and
continues to be case during the CoC period.
Covenants
None
Other
Events of default covers debt of issuer and its subsidiaries for indebtedness exceeding USD30m. Subsidiary means
any firm which the issuer owns/controls, directly or indirectly, more than 50% of the issued share capital or voting rights.
Source: Company data, HSBC

413

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dong Energy
Bond
Coupon

Maturity

3.5%

Issuer

Guarantor

Out amt

Type

29 Jun 2012 Dong Energy A/S

None

EUR500m

Senior unsecured

4.875%

07 May 2014 Dong Energy A/S

None

EUR500m

EMTN sr unsecured

4%

16 Dec 2016 Dong Energy A/S

None

EUR500m

EMTN sr unsecured

6.5%

07 May 2019 Dong Energy A/S

None

EUR500m

EMTN sr unsecured

4.875%

16 Dec 2021 Dong Energy A/S

None

EUR500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers the relevant debt of issuer and its material subsidiaries. Relevant debt is defined as publicly
listed debt. Material subsidiaries are defined in the trust deed. The definition explicitly excludes security on property
granted in favour of Danish institutions subject to a limitation of 15% of the issuers total consolidated assets in the
most recent annual audited accounts.
Put
None
Covenants
None
Other
Events of default include cross default of the issuer or any material subsidiary with a EUR20m carve-out. Material
subsidiaries are defined in the trust deed.
Source: Company data, HSBC

414

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dong Energy
Bond
Coupon

Maturity

Issuer

5.75%

09 Apr 2040 Dong Energy A/S

Guarantor

Out amt

Type

None

GBP500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and its material subsidiaries, which include bonds, notes,
debentures or other securities which for the time being are, are intended to be, or are capable of being quoted, listed
or dealt in or traded on any stock exchange or OTC or other securities market.
Put
None
Covenants
None
Other
Events of default cover debt of the issuer and its material subsidiaries, for amounts of no less than EUR20m (or
equivalent in other currencies). Material subsidiary is defined as a subsidiary whose total revenues or total assets
represent no less than 10% of the total revenues/assets of the group.
Source: Company data, HSBC

415

abc

European Credit Research


Corporate Bond Covenants
September 2010

E.ON
Bond
Coupon

Maturity

2.5%

Issuer

Guarantor

Out amt

Type

30 Nov 2011 E.ON Intl Finance BV E.ON AG

EUR750m

EMTN sr unsecured

5.125%

02 Oct 2012 E.ON Intl Finance BV E.ON AG

EUR1750m

EMTN sr unsecured

4.125%

26 Mar 2013 E.ON Intl Finance BV E.ON AG

EUR750m

EMTN sr unsecured

5.125%

07 May 2013 E.ON Intl Finance BV E.ON AG

EUR1500m

EMTN sr unsecured

5.125%

27 Jan 2014 E.ON Intl Finance BV E.ON AG

GBP350m

EMTN sr unsecured

4.875%

28 Jan 2014 E.ON Intl Finance BV E.ON AG

EUR1750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers bond issue of the issuer. Bond issue is defined as indebtedness in the form of bonds,
security, certificate or other instrument which is or capable of being listed, quoted or traded on a stock exchange,
OTC or other recognised securities market and any guarantee or other indemnity in respect of such indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys or S&P within 180 days after
a change of control announcement. A change of control is defined by the legal or beneficial ownership (indirectly or
directly) of more than 50% of the total voting shares of the guarantor. A rating downgrade is defined as a downgrade
of the guarantors solicited long-term unsecured debt to non-investment grade (BB+ or worse in relation to S&P and
Ba1 or worse in relation to Moodys) or when no credit rating is assigned (other than temporarily).
Covenants
None
Other
Events of default include cross-default of the issuer or guarantor for obligations exceeding EUR50m.
Source: Company data, HSBC

416

abc

European Credit Research


Corporate Bond Covenants
September 2010

E.ON
Bond
Coupon

Maturity

5.25%

Issuer

Guarantor

Out amt

Type

06 Jun 2014 E.ON Intl Finance BV E.ON AG

EUR1000m

EMTN sr unsecured

5.25%

08 Sep 2015 E.ON Intl Finance BV E.ON AG

EUR1250m

EMTN sr unsecured

5.5%

19 Jan 2016 E.ON Intl Finance BV E.ON AG

EUR1500m

EMTN sr unsecured

5.5%

02 Oct 2017 E.ON Intl Finance BV E.ON AG

EUR2375m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers bond issue of the issuer. A bond issue is defined as indebtedness in the form of bonds,
security, certificate or other instrument which is or capable of being listed, quoted or traded on a stock exchange,
OTC or other recognised securities market and any guarantee or other indemnity in respect of such indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys or S&P within 180 days after
a change of control announcement. A change of control is defined as the legal or beneficial ownership (indirectly or
directly) of more than 50% of the total voting shares of the guarantor. A rating downgrade is defined as a downgrade
of the guarantors solicited long-term unsecured debt to non-investment grade (BB+ or worse in relation to S&P and
Ba1 or worse in relation to Moodys) or when no credit rating is assigned (other than temporarily).
Covenants
None
Other
Events of default include cross-default of issuer or guarantor for obligations exceeding EUR50m.
Source: Company data, HSBC

417

abc

European Credit Research


Corporate Bond Covenants
September 2010

E.ON
Bond
Coupon

Maturity

6%

Issuer

Guarantor

Out amt

Type

30 Oct 2019 E.ON Intl Finance BV E.ON AG

GBP850m

EMTN sr unsecured

5.75%

07 May 2020 E.ON Intl Finance BV E.ON AG

EUR1400m

EMTN sr unsecured

5.875%

30 Oct 2037 E.ON Intl Finance BV E.ON AG

GBP900m

EMTN sr unsecured

6.75%

27 Jan 2039 E.ON Intl Finance BV E.ON AG

GBP700m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers bond issue of the issuer. A bond issue is defined as indebtedness in the form of bonds,
security, certificate or other instrument which is or capable of being listed, quoted or traded on a stock exchange,
OTC or other recognised securities market and any guarantee or other indemnity in respect of such indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys or S&P within 180 days after
a change of control announcement. A change of control is defined by the legal or beneficial ownership (indirectly or
directly) of more than 50% of the total voting shares of the guarantor. A rating downgrade is defined as a downgrade
of the guarantors solicited long-term unsecured debt to non-investment grade (BB+ or worse in relation to S&P and
Ba1 or worse in relation to Moodys) or when no credit rating is assigned (other than temporarily).
Covenants
None
Other
Events of default include cross-default of issuer or guarantor for obligations exceeding EUR50m.
Source: Company data, HSBC

418

abc

European Credit Research


Corporate Bond Covenants
September 2010

E.ON
Bond
Coupon

Maturity

6.375%

Issuer

Guarantor

Out amt

Type

29 May 2012 E.ON Intl Finance BV E.ON AG

GBP500m

EMTN sr unsecured

6.375%

29 May 2017 E.ON Intl Finance BV E.ON AG

EUR900m

EMTN sr unsecured

6.375%

07 Jun 2032 E.ON Intl Finance BV E.ON AG

GBP975m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers the following indebtedness of the issuer, which includes bonds, securities, certificates, or
other instruments which are quoted, listed or ordinarily dealt on any stock exchange or over-the-counter or other
securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or guarantor for obligations exceeding EUR25m.
Source: Company data, HSBC

419

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDF
Bond
Coupon

Maturity

5.625%

Issuer

Guarantor

Out amt

Type

23 Jan 2013 EDF SA

None

EUR2000m

EMTN sr unsecured

4.625%

06 Nov 2013 EDF SA

None

EUR500m

EMTN sr unsecured

5%

30 May 2014 EDF SA

None

EUR600m

EMTN sr unsecured

4.5%

17 Jul 2014

None

EUR3269m

EMTN sr unsecured

EDF SA

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, debenture stock, loan
stock, certificates, or other instruments which are quoted, listed or ordinarily dealt on any stock exchange or overthe-counter or other securities market.
Put
None
Covenants
None
Other
Events of default are subject to a carve-out of EUR100m. No cross-default on subsidiaries. Additional events of
default include the dissolution of the issuer prior to redemption unless the instruments are transferred to a French
legal entity and: (1) at least 51% of the capital of the entity remains directly or indirectly controlled by the republic of
France; (2) the instruments are assigned ratings of at least A+/A1 by Moodys and S&P, respectively, and the entity
assumes all or part of the existing industrial activities of the issuer and owns the assets corresponding to these
activities; or (3) the entitys obligations and liabilities are unconditionally guaranteed by the Republic of France.
Source: Company data, HSBC

420

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDF
Bond
Coupon

Maturity

5.125%

Issuer

Guarantor

Out amt

Type

23 Jan 2015 EDF SA

None

EUR2000m

EMTN sr unsecured

5.5%

25 Oct 2016 EDF SA

None

EUR1100m

EMTN sr unsecured

5%

05 Feb 2018 EDF SA

None

EUR1500m

EMTN sr unsecured

5.375%

29 May 2020 EDF SA

None

EUR1200m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, debenture stock, loan
stock, certificates, or other instruments which are quoted, listed or ordinarily dealt on any stock exchange or overthe-counter or other securities market.
Put
None
Covenants
None
Other
Events of default are subject to a carve-out of EUR100m. No cross-default on subsidiaries. Additional events of
default include the dissolution of the issuer prior to redemption unless the instruments are transferred to a French
legal entity and: (1) at least 51% of the capital of the entity remains directly or indirectly controlled by the republic of
France; (2) the instruments are assigned ratings of at least A+/A1 by Moodys and S&P, respectively, and the entity
assumes all or part of the existing industrial activities of the issuer and owns the assets corresponding to these
activities; or (3) the entitys obligations and liabilities are unconditionally guaranteed by the Republic of France.
Source: Company data, HSBC

421

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDF
Bond
Coupon

Maturity

6.25%

Issuer

Guarantor

Out amt

Type

25 Jan 2021 EDF SA

None

EUR2000m

EMTN sr unsecured

6.875%

12 Dec 2022 EDF SA

None

GBP400m

EMTN sr unsecured

4.625%

11 Sep 2024 EDF SA

EDF

EUR2500m

EMTN sr unsecured

6.25%

30 May 2028 EDF SA

None

GBP500m

EMTN sr unsecured

4.625%

26 Apr 2030 EDF SA

EDF

EUR1500m

EMTN sr unsecured

5.875%

18 Jul 2031

EDF SA

None

GBP650m

EMTN sr unsecured

5.625%

21 Feb 2033 EDF SA

None

EUR850m

EMTN sr unsecured

6.125%

02 Jun 2034 EDF SA

None

GBP1500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, debenture stock, loan
stock, certificates, or other instruments which are quoted, listed or ordinarily dealt on any stock exchange or overthe-counter or other securities market.
Put
None
Covenants
None
Other
Events of default are subject to a carve-out of EUR100m. No cross-default on subsidiaries. Additional events of
default include the dissolution of the issuer prior to redemption unless the instruments are transferred to a French
legal entity and: (1) at least 51% of the capital of the entity remains directly or indirectly controlled by the republic of
France; (2) the instruments are assigned ratings of at least A+/A1 by Moodys and S&P, respectively, and the entity
assumes all or part of the existing industrial activities of the issuer and owns the assets corresponding to these
activities; or (3) the entitys obligations and liabilities are unconditionally guaranteed by the Republic of France.
Source: Company data, HSBC

422

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDF Energy Networks


Bond
Coupon

Maturity

8.75%

Issuer

Guarantor

Out amt

Type

30 Mar 2012 EDF EN (EPN) Plc

None

GBP200m

Senior unsecured

5.75%

08 Mar 2024 EDF EN (EPN) Plc

None

GBP350m

EMTN sr unsecured

8.5%

31 Mar 2025 EDF EN (EPN) Plc

None

GBP200m

Senior unsecured

5.5%

05 Jun 2026 EDF EN (SPN) Plc

None

GBP300m

EMTN sr unsecured

6.125%

07 Jun 2027 EDF EN (LPN) Plc

None

GBP300m

EMTN sr unsecured

Call
2012 Bond: Spens call reference UKT 9% 2012, 2025 Bond: Spens call reference UKT 8.75% 2017, 2027 Bond:
Spens call reference UKT 6% 2028. All also callable for taxation reasons.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any PES subsidiary, which includes bonds, notes,
debentures, debenture stock, loan stock, or other securities which are quoted, listed or ordinarily dealt on any stock
exchange or OTC or other securities market. Excludes debt that has an initial maturity of 31 December 2013 or later
and an aggregate amount not exceeding the greater of GBP200m and 20% of capital and reserves, as well as
project finance indebtedness.
Put
A put event occurs when there is a restructuring event and either a rating downgrade or negative rating event. A
restructuring event includes loss or modification of licence, or any legislation removing the Secretary of State for
Trade and Industry and/or Gas and Electricity Markets Authority from their duties. A rating downgrade is lowering the
rating from investment grade to non-investment grade or, if the rating is already non-investment grade, then lowering
the rating by one further category. A negative rating event occurs when the issuer is unable to obtain an investment
grade rating or does not seek to obtain a rating.
Covenants
None
Other
Events of default include a cross-default of issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose net profits
before tax or gross assets represent 20% or more of the consolidated net profits before tax or consolidated gross
assets.
Source: Company data, HSBC

423

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDF Energy Networks


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

11 Nov 2016 EDF EN (LPN) Plc


5.125%
Step up
provision
(see Other)

None

GBP300m

EMTN sr unsecured

6.125%

12 Nov 2031 EDF EN (SPN) Plc

None

GBP300m

EMTN sr unsecured

6%

12 Nov 2036 EDF EN (EPN) Plc

None

GBP350m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any principal subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock or other securities, whether issued for cash or, in whole or in part, for
a consideration other than cash, and which, with the agreement of the person issuing the same, are quoted, listed or
ordinarily dealt in on any stock exchange or recognised OTC or other securities market.
Put
None
Covenants
None
Other
Step up: If the bonds lowest rating is BBB+ or Baa1 on 11 November 2010 (or on 12 May 2011), then there will be a
step up of 25bp for the succeeding fixed interest period (or for all succeeding fixed interest periods). If the bonds
lowest rating is BBB or Baa2 on 11 November 2010 (or on 12 May 2011), then there will be a step up of 50bp for the
succeeding fixed interest period (or for all succeeding fixed interest periods). If the bonds lowest rating is BBB- or
Baa3 or lower on 11 November 2010 (or on 12 May 2011), then there will be a step up of 75bp for the succeeding
fixed interest period (or for all succeeding fixed interest periods). In case of a securitisation event, there will be step
up of 25bp for all succeeding fixed interest periods. Events of default cover debt of the issuer and its principal
subsidiaries for no less than GBP20m (or its equivalent in other currencies). A principal subsidiary is defined as any
subsidiary whose profits from ordinary activities before tax contribute at least 20% to the consolidated profits on
ordinary activities before tax.
Source: Company data, HSBC

424

abc

European Credit Research


Corporate Bond Covenants
September 2010

RTE EDF Transport


Bond
Coupon

Maturity

4.875%

Issuer

Guarantor

Out amt

Type

06 May 2015 RTE EDF Transport


SA

None

EUR1250m

EMTN sr unsecured

4.125%

27 Sep 2016 RTE EDF Transport


SA

None

EUR1000m

EMTN sr unsecured

5.125%

12 Sep 2018 RTE EDF Transport


SA

None

EUR1000m

EMTN sr unsecured

3.875%

28 Jun 2022 RTE EDF Transport


SA

None

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, debenture stock, loan
stock, certificates, or other instruments which are quoted, listed or ordinarily dealt on any stock exchange or overthe-counter or other securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer on any indebtedness exceeding EUR50m.
Source: Company data, HSBC

425

abc

European Credit Research


Corporate Bond Covenants
September 2010

Edison
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

4.25%

22 Jul 2014

Edison SpA

None

EUR700m

EMTN sr unsecured

3.25%

17 Mar 2015 Edison SpA

None

EUR500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any material subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock, certificates or other instruments which are listed, quoted or traded on
any stock exchange or over-the-counter or other securities market. This excludes project finance indebtedness. A
material subsidiary is defined as any subsidiary that represents 10% or more of the consolidated net revenues or
consolidated net assets, in the latest audited financial statements.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer and any material subsidiary for obligations exceeding EUR25m
(2010 bond) or EUR50m (2014 and 2015 bond). A material subsidiary is defined as any subsidiary that represents
10% or more of the consolidated net revenues or consolidated net assets, in the latest audited financial statements.
Source: Company data, HSBC

426

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDP
Bond
Coupon

Maturity

Issuer

5.875%

28 Mar 2011 EDP SA

Guarantor

Out amt

Type

None

EUR747m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers indebtedness of the issuer and EDP, which includes bonds, notes, debentures, loan stock,
or other debt securities, which have an original maturity of more than one year and are, or are intended to be,
quoted, listed or ordinarily dealt in on any stock exchange. This excludes indebtedness placed in majority with
investors domiciled in Portugal and purchased in Portugal. The definition also excludes securitisation or like
arrangements in accordance with normal market practice as well as project finance debt.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, EDP, or any material subsidiary for obligations exceeding USD50m.
The termination or the modification of the keepwell agreement with negative consequences for the holders in the
trustees opinion constitutes an event of default. Material subsidiaries are entities controlled by EDP or directly or
indirectly owned by more than 50% that: (i) generate or distribute electricity in Portugal; and (ii) whose total assets
represent more than 5% of the groups consolidated assets in the latest audited financial statements; or (iii) whose
total revenues represent more than 5% of consolidated revenues in the latest audited financial statements.
Source: Company data, HSBC

427

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDP
Bond
Coupon

Maturity

Issuer

4.25%

12 Jun 2012 EDP Finance BV

Guarantor

Out amt

Type

Keepwell agreement

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer and EDP, which includes bonds, notes, debentures, loan stock, or
other debt securities, which have an original maturity of more than one year and are, or are intended to be, quoted, listed
or ordinarily dealt in on any stock exchange. This excludes indebtedness placed in majority with investors domiciled in
Portugal and purchased in Portugal. The definition also excludes securitisation arrangements in accordance with normal
market practice and secured debt raised in relation to acquisition financing as well as project finance.
Put
Put at par plus accrued interest if there is a change of control resulting in a downgrade to non-investment grade, (or, if
already non-investment grade, rating is lowered by one full rating notch) or rating assigned is withdrawn by either Moodys,
S&P or Fitch in the 120 days following the change of control. A change of control is defined as a person or a group of
persons acquiring or owning directly or indirectly more than 50% of EDP, or becoming entitled to exercise control over
EDP.
Covenants
Conditions of the keepwell agreement between EDP SA and EDP BV are as follows: (i) at any time, should EDP BV
have insufficient funds to meet its payment obligations, EDP shall make funds available to EDP BV before the due
date; (ii) these funds can be provided via an equity injection or via a subordinated loan; (iii) EDP warrants and agrees
that its payment obligations arising under the keepwell agreement constitute unsecured and unsubordinated
obligations of EDP and rank pari passu with all other unsecured and unsubordinated obligations of EDP; (iv) should
EDP BV be in liquidation, administration or receivership and EDP be in default of its obligations, EDP shall be liable to
EDP BV for such default; (v) the agreement can be modified with the written agreement of EDP and EDP BV provided
that it does not have any adverse effect upon holders of instruments issued by EDP BV.
Other
Events of default include cross-default of the issuer, EDP, or any material subsidiary for obligations exceeding
USD50m. The termination or the modification of the keepwell agreement with negative consequences for the holders
in the trustees opinion constitutes an events of default. Material subsidiaries are entities controlled by EDP or
directly or indirectly owned by more than 50%: that (i) generate or distribute electricity in Portugal; and (ii) whose
total assets represent more than 5% of the groups consolidated assets in the latest audited financial statements; or
(iii) whose total revenues represent more than 5% of consolidated revenues in the latest audited financial
statements.
Source: Company data, HSBC

428

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDP
Bond
Coupon

Maturity

5.5%

Issuer

Guarantor

Out amt

Type

18 Feb 2014 EDP Finance BV

Keepwell agreement

EUR1000m EMTN sr unsecured

3.25%

16 Mar 2015 EDP Finance B.V.

Keepwell agreement

EUR1000m EMTN sr unsecured

3.75%

22 Jun 2015 EDP Finance BV

Keepwell agreement

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer and EDP, which includes bonds, notes, debentures, loan stock, or
other debt securities, which have an original maturity of more than one year and are, or are intended to be, quoted,
listed or ordinarily dealt in on any stock exchange. This excludes indebtedness placed in majority with investors
domiciled in Portugal and purchased in Portugal. The definition also excludes securitisation arrangements in
accordance with normal market practice and secured debt raised in relation to acquisition financing as well as project
finance.
Put
Put at par plus accrued interest if there is a change of control resulting in a downgrade to non-investment grade, (or, if
already non-investment grade, rating is lowered by one full rating notch) or rating assigned is withdrawn by either Moodys,
S&P or Fitch in the 120 days after the change of control. A change of control is defined as a person or a group of persons
acquiring or owning directly or indirectly more than 50% of EDP or becoming entitled to exercise control over EDP.
Covenants
The conditions of the keepwell agreement between EDP SA and EDP BV are as follows: (i) At any time, should EDP
BV have insufficient funds to meet its payment obligations, EDP shall make funds available to EDP BV before the due
date; (ii) these funds can be provided via an equity injection or via a subordinated loan; (iii) EDP warrants and agrees
that its payment obligations arising under the keepwell agreement constitute unsecured and unsubordinated
obligations of EDP, and rank pari passu with all other unsecured and unsubordinated obligations of EDP; (iv) should
EDP BV be in liquidation, administration or receivership and EDP be in default of its obligations, EDP shall be liable to
EDP BV for such default; (v) the agreement can be modified with the written agreement of EDP and EDP BV,
provided that it does not have any adverse effect upon holders of instruments issued by EDP BV.
Other
Events of default include cross default of issuer, EDP, or any material subsidiary for obligations exceeding USD50m.
The termination or the modification of the keepwell agreement with negative consequences for the holders in the
trustees opinion constitutes an event of default. Material subsidiaries are entities controlled by EDP or directly or
indirectly owned by more than 50% that: (i) generate or distribute electricity in Portugal; and (ii) whose total assets
represent more than 5% of the groups consolidated assets in the latest audited financial statements; or (iii) whose
total revenues represent more than 5% of consolidated revenues in the latest audited financial statements.
Source: Company data, HSBC

429

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDP
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

13 Jun 2016 EDP Finance BV

Keepwell agreement

EUR500m

EMTN sr unsecured

4.75%

26 Sep 2016 EDP Finance BV

Keepwell agreement

EUR1000m

EMTN sr unsecured

6.625%

09 Aug 2017 EDP Finance BV

Keepwell agreement

GBP200m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers indebtedness of the issuer and EDP, which includes bonds, notes, debentures, loan stock, or
other debt securities, which have an original maturity of more than one year and are, or are intended to be, quoted,
listed or ordinarily dealt in on any stock exchange. This excludes indebtedness placed in majority with investors
domiciled in Portugal and purchased in Portugal. The definition also excludes securitisation arrangements in
accordance with normal market practice and secured debt raised in relation to acquisition financing as well as project
finance.
Put
Put at par plus accrued interest if there is a change of control resulting in a downgrade to non-investment grade, (or, if
already non-investment grade, rating is lowered by one full rating notch) or rating assigned is withdrawn by either Moodys,
S&P or Fitch in the 120 days after the change of control . A change of control is defined as a person or group of persons
acquiring or owning directly or indirectly more than 50% of EDP or becoming entitled to exercise control over EDP.
Covenants
The conditions of the keepwell agreement between EDP SA and EDP BV are as follows: (i) at any time, should EDP
BV have insufficient funds to meet its payment obligations, EDP shall make funds available to EDP BV before the due
date; (ii) these funds can be provided via an equity injection or via a subordinated loan; (iii) EDP warrants and agrees
that its payment obligations arising under the keepwell agreement constitute unsecured and unsubordinated
obligations of EDP and rank pari passu with all other unsecured and unsubordinated obligations of EDP; (iv) should
EDP BV be in liquidation, administration or receivership and EDP be in default of its obligations, EDP shall be liable to
EDP BV for such default; (v) the agreement can be modified with the written agreement of EDP and EDP BV,
provided that it does not have any adverse effect upon holders of instruments issued by EDP BV.
Other
Events of default include cross-default of the issuer, EDP, or any material subsidiary for obligations exceeding
USD50m. The termination or the modification of the keepwell agreement with negative consequences for the holders
in the trustees opinion constitutes an event of default. Material subsidiaries are entities controlled by EDP or directly
or indirectly owned by more than 50% that: (i) generate or distribute electricity in Portugal; and (ii) whose total assets
represent more than 5% of the groups consolidated assets in the latest audited financial statements; or (iii) whose
total revenues represent more than 5% of consolidated revenues in the latest audited financial statements.
Source: Company data, HSBC

430

abc

European Credit Research


Corporate Bond Covenants
September 2010

EDP
Bond
Coupon

Maturity

4.125%
8.625%

Issuer

Guarantor

Out amt

Type

29 Jun 2020 EDP Finance BV

Keepwell agreement

EUR300m

Senior unsecured

04 Jan 2024 EDP Finance BV

Keepwell agreement

GBP325m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers indebtedness of the issuer and EDP, which includes bonds, notes, debentures, loan stock, or
other debt securities, which have an original maturity of more than one year and are, or are intended to be, quoted,
listed or ordinarily dealt in on any stock exchange. This excludes indebtedness placed in majority with investors
domiciled in Portugal and purchased in Portugal. The definition also excludes securitisation arrangements in
accordance with normal market practice and secured debt raised in relation to acquisition financing as well as project
finance.
Put
Put at par plus accrued interest if there is a change of control resulting in a downgrade to non-investment grade, (or, if
already non-investment grade, rating is lowered by one full rating notch) or rating assigned is withdrawn by either Moodys,
S&P or Fitch in the 120 days after the change of control . A change of control is defined as a person or a group of persons
acquiring or owning directly or indirectly more than 50% of EDP or becoming entitled to exercise control over EDP.
Covenants
Conditions of the keepwell agreement between EDP SA and EDP BV are as follows: (i) at any time, should EDP BV
have insufficient funds to meet its payment obligations, EDP shall make funds available to EDP BV before the due
date; (ii) these funds can be provided via an equity injection or via a subordinated loan; (iii) EDP warrants and agrees
that its payment obligations arising under the keepwell agreement constitute unsecured and unsubordinated
obligations of EDP and rank pari passu with all other unsecured and unsubordinated obligations of EDP; (iv) should
EDP BV be in liquidation, administration or receivership and EDP shall be in default of its obligations, EDP shall be
liable to EDP BV for such default; (v) the agreement can be modified with written agreement of EDP and EDP BV
provided that it does not have any adverse effect upon holders of instruments issued by EDP BV.
Other
Events of default include cross-default of Issuer, EDP, or any material subsidiary for obligations exceeding USD50m.
The termination or the modification of the keepwell agreement with negative consequences for the holders in the
trustees opinion constitutes an event of default. Material subsidiaries are entities controlled by EDP or directly or
indirectly owned by more than 50% that: (i) generate or distribute electricity in Portugal; and (ii) whose total assets
represent more than 5% of the groups consolidated assets in the latest audited financial statements; or (iii) whose
total revenues represent more than 5% of consolidated revenues in the latest audited financial statements.
Source: Company data, HSBC

431

abc

European Credit Research


Corporate Bond Covenants
September 2010

Electricity Supply Board (ESB)


Bond
Coupon

Maturity

Issuer

05 Mar 2020 ESB Finance Ltd


FRN
Step up
provision
(see Other)

Guarantor

Out amt

Electricity Supply Board GBP275m


(ESB)

Type
EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers debt of the issuer, the guarantor and any principal subsidiaries of the two. This includes
bonds, notes or other securities which are for the time being, or are capable of being, quoted, listed or ordinarily
dealt in on any stock exchange or other organised securities market.
Put
Put at par in an event risk put event. An event risk put event will occur in the event of a change of control of the
issuer that is followed by a rating downgrade from investment to sub-investment grade. If the notes are rated subinvestment grade already, then the CoC alone is deemed a put event.
Covenants
None
Other
Step-up provision: if the notes are not rated investment grade by at least two rating agencies (among Moodys, S&P,
Fitch and their successors) by the first interest payment date, the rate of interest will be increased by 125bp pa. If,
subsequently, the notes are rated investment grade, then the applicable rate of interest will be decreased 125bp pa.
Source: Company data, HSBC

432

abc

European Credit Research


Corporate Bond Covenants
September 2010

Elia SO
Bond
Coupon

Maturity

4.5%

Issuer

Guarantor

Out amt

Type

22 Apr 2013 Elia System Operator SA None

EUR500m

Senior unsecured

4.75%

13 May 2014 Elia System Operator SA None

EUR500m

Senior unsecured

5.625%

22 Apr 2016 Elia System Operator SA None

EUR500m

Senior unsecured

5.25%

13 May 2019 Elia System Operator SA None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant debt of the issuer and any material subsidiary, which includes bonds, notes, or
other securities, which have an original maturity of more than one year and are quoted, listed or ordinarily dealt on
any stock exchange or over-the-counter or other securities market. A material subsidiary is defined as a subsidiary
representing more than 20% of consolidated turnover or consolidated total assets in the latest audited accounts.
Put
None
Covenants
None
Other
Events of default include a cross-default of the issuer or any material subsidiary for obligations exceeding EUR50m.
A material subsidiary is defined as a subsidiary representing more than 20% of consolidated turnover or consolidated
total assets in the latest audited accounts.
Source: Company data, HSBC

433

abc

European Credit Research


Corporate Bond Covenants
September 2010

EnBW
Bond
Coupon

Maturity

5.875%

Issuer

Guarantor

Out amt

Type

28 Feb 2012 EnBW International


Finance BV

EnBW

EUR1000m

EMTN sr unsecured

6%

20 Nov 2013 EnBW International


Finance BV

EnBW

EUR750m

EMTN sr unsecured

4.125%

07 Jul 2015

EnBW International
Finance BV

EnBW

EUR750m

EMTN sr unsecured

4.25%

19 Oct 2016 EnBW International


Finance BV

EnBW

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness of the issuer or the guarantor and principal subsidiaries. Capital
Market indebtedness is defined as bonds, or other securities, which are quoted, listed or ordinarily dealt on any stock
exchange or over-the-counter or other securities market. A principal subsidiary is a subsidiary accounting for at least
5% of the groups sales or total assets in the latest consolidated financial statements.
Put
None
Covenants
None
Other
Events of default include cross default of issuer and guarantor for obligations exceeding EUR10m, with no reference
to subsidiaries. Material change in business.
Source: Company data, HSBC

434

abc

European Credit Research


Corporate Bond Covenants
September 2010

EnBW
Bond
Coupon

Maturity

6.875%

Issuer

Guarantor

Out amt

Type

20 Nov 2018 EnBW International


Finance BV

EnBW

EUR750m

EMTN sr unsecured

4.875%

16 Jan 2025 EnBW International


Finance BV

EnBW

EUR500m

EMTN sr unsecured

6.125%

07 Jul 2039

EnBW

EUR600m

EMTN sr unsecured

EnBW International
Finance BV

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness of the issuer or the guarantor and principal subsidiaries. Capital
market indebtedness is defined as bonds, or other securities which are quoted, listed or ordinarily dealt on any stock
exchange or over-the-counter or other securities market. A principal subsidiary is a subsidiary accounting for at least
5% of the groups sales or total assets in the latest consolidated financial statements.
Put
None
Covenants
None
Other
Events of default include cross default of issuer and guarantor for obligations exceeding EUR10m, with no reference
to subsidiaries. Material change in business.
Source: Company data, HSBC

435

abc

European Credit Research


Corporate Bond Covenants
September 2010

Endesa
Bond
Coupon

Maturity

Issuer

6.125%

05 Jul 2012

5.375%

Guarantor

Out amt

Type

International Endesa Endesa SA


BV

GBP400m

EMTN sr unsecured

21 Feb 2013 International Endesa Endesa SA


BV

EUR700m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers external indebtedness of issuer and guarantor, which includes any present or future
indebtedness denominated in euros and where more than 50% of such indebtedness is owed to persons outside the
Netherlands or outside the Kingdom Spain. The negative pledge also covers escritura pblica (public document or
deed or instrument witnessed by a public notary) of the guarantor.
Put
None
Covenants
None
Other
Events of default include cross default of issuer and guarantor with no references to a carve-out or subsidiaries.
Source: Company data, HSBC

436

abc

European Credit Research


Corporate Bond Covenants
September 2010

Enel
Bond
Coupon

Maturity

4.25%

Issuer

Guarantor

Out amt

Type

12 Jun 2013 Enel SpA

None

EUR750m

EMTN sr unsecured

4.75%

12 Jun 2018 Enel SpA

None

EUR750m

EMTN sr unsecured

5.25%

29 Sep 2023 Enel Investment


Holdings BV

Enel SpA

EUR300m

EMTN sr unsecured

5.25%

20 May 2024 Enel SpA

None

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, or other securities
which are, or are intended to be, quoted, listed or ordinarily dealt in on any stock exchange or over-the-counter or
other securities market.
Put
None
Covenants
None
Other
Events of default include cross default of the issuer and any material subsidiary, subject to a carve-out of USD25m
or equivalent. A material subsidiary is defined as any entity directly or indirectly controlled and with gross revenues
and total assets accounting for more than 10% of Enels consolidated revenues or total assets.
Source: Company data, HSBC

437

abc

European Credit Research


Corporate Bond Covenants
September 2010

Enel
Bond
Coupon

Maturity

FRN

Issuer

Guarantor

Out amt

Type

20 Jun 2014 Enel SpA

None

EUR1000m

EMTN sr unsecured

5.25%

14 Jan 2015 ENEL SpA

None

EUR1000m

EMTN sr unsecured

FRN

14 Jan 2015 ENEL SpA

None

EUR1300m

EMTN sr unsecured

4%

14 Sep 2016 ENEL Finance


International SA

Enel SpA

EUR1500m

EMTN sr unsecured

5.25%

20 Jun 2017 Enel SpA

None

EUR1500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, or other securities
which are, or are intended to be, quoted, listed or ordinarily dealt in on any stock exchange or over-the-counter or
other securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer subject to a carve-out of EUR100m or equivalent.
Source: Company data, HSBC

438

abc

European Credit Research


Corporate Bond Covenants
September 2010

Enel
Bond
Coupon

Maturity

6.25%

Issuer

Guarantor

Out amt

Type

20 Jun 2019 Enel SpA

None

GBP550m

EMTN sr unsecured

5%

14 Sep 2022 ENEL Finance


International SA

Enel SpA

EUR2500m

EMTN sr unsecured

5.625%

14 Aug 2024 ENEL Finance


International SA

Enel SpA

GBP850m

EMTN sr unsecured

5.625%

21 Jun 2027 Enel SpA

None

EUR850m

EMTN sr unsecured

5.75%

22 Jun 2037 Enel SpA

None

GBP550m

EMTN sr unsecured

5.75%

14 Sep 2040 ENEL Finance


International SA

Enel SpA

GBP1400m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness of the issuer, which includes bonds, notes, debentures, or other securities
which are, or are intended to be, quoted, listed or ordinarily dealt in on any stock exchange or over-the-counter or
other securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer subject to a carve-out of EUR100m or equivalent.
Source: Company data, HSBC

439

abc

European Credit Research


Corporate Bond Covenants
September 2010

ENW
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

6.125%

21 Jul 2021

ENW Finance Plc

Electricity North West


Ltd

GBP200m

Unwrapped notes

Call
Tax call.
Negative pledge
Negative pledge covers the financial indebtedness of the issuer, guarantor and its subsidiaries. Financial
indebtedness means monies borrowed and includes leases, sold recourse receivables.
Put
Put at par and accrued interests if a rating downgrade follows a restructuring event within 60 days. A restructuring
event is defined as loss or material modification of the guarantors licence of any legislation removing, reducing or
qualifying the duties and powers of the Secretary of State and/or the energy regulator. A rating downgrade is defined
as a downgrade to below investment grade or a one-notch downgrade if the rating is already non-investment grade.
Covenants
The issuer and guarantor shall use all reasonable endeavours to maintain an investment-grade rating. Restriction on:
(i) further financial indebtedness if net debt to RAV is to exceed 65% as a result; (ii) payments of dividends, return of
capital to any affiliate of EVN if net debt to RAV is to rise to above 65% as a result.
Other
Events of default covers the Issuer, the guarantor and relevant subsidiaries subject to a carve-out of GBP20m or 2%
of adjusted capital and reserves. The net debt to RAV ratio is equal or higher than 70% and the issuer and the
guarantor fail to remedy such breach for 30 days.
Source: Company data, HSBC

440

abc

European Credit Research


Corporate Bond Covenants
September 2010

ENW
Bond
Coupon

Maturity

Issuer

Guarantor

6.75%

20 Jun 2015 ENW Capital Finance NWEN, NWEN Group


Plc
Ltd

Out amt

Type

GBP300m

Secured on shares in
ENW (fixed and
floating charge)

Call
Tax call.
Negative pledge
Senior secured unwrapped bonds rank pari passu with each other.
Put
None
Covenants
Trigger event occurs when: (i) net debt to RAV ratio increases above 85% (12 months forward and backwards); (ii)
ENW net debt to RAV ratio rises above 65% (same period); (iii) adjusted interest cover ratio is below 1.1 (same
period); (iv) aggregate of debt service reserve liquidity facility and balance under DSR Account<18 months NWEN
senior debt interest service; (v) aggregate of operating cash flows and authorised credit facilities at NZEN or ENW <
12-months forecast capex, working capital requirements, swap termination fees and interest; (vi) downgrade to noninvestment grade; (vii) breach of non-appointed business limits. A trigger event activation results in the blocking of
distributions, consultation with the regulator and the appointment of non-executive directors.
Other
Events of default include: (i) net debt to RAV > 92%; (ii) adjusted interest cover ratio < 1x; (iii) ENW defaults; (iv)
change of control; (v) non-payment of interest and principal, breach of covenants. There is a 12-month standstill
period following an event of default this can be extended to 18 months or shortened at the option of the senior debt
instructing group.
Source: Company data, HSBC

441

abc

European Credit Research


Corporate Bond Covenants
September 2010

EWE
Bond
Coupon

Maturity

4.375%
4.875%

Issuer

Guarantor

Out amt

Type

14 Oct 2014 EWE AG

None

EUR1000m

Senior unsecured

14 Oct 2019 EWE AG

None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness issued or guaranteed by the issuer or principal subsidiaries.
The definition excludes companies becoming principal subsidiaries or being merged with the issuer or any principal
subsidiary after the issue date as well as project financing. Capital market indebtedness is defined as notes or
securities traded on recognised securities market. A principal subsidiary is a subsidiary whose total assets and/or
EBITDA account for 5% or more of consolidated total assets and/or EBITDA by reference to the groups latest
audited financials statements.
Put
None
Covenants
None
Other
Events of default include cross default of the issuer or any principal subsidiary with a EUR25m carve-out. It is an
event of default if the issuer is dissolved or ceases, or threatens to cease, to carry substantially all of its business
operations as a result of restructuring measures defined as unbundling resulting from the implementation of
directives 2003/54/EC and 2003/55/EC. A principal subsidiary is a subsidiary whose total assets and/or EBITDA
account for 5% or more of consolidated total assets and/or EBITDA by reference to the groups latest audited
financials statements.
Source: Company data, HSBC

442

abc

European Credit Research


Corporate Bond Covenants
September 2010

EWE
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.25%

16 Jul 2021

EWE AG

None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness of the issuer and its principal subsidiaries. Capital market
indebtedness is defined as notes or other instruments which are, or are intended to be, listed, quoted, dealt in or
traded on any stock exchange or in any organised market, any guarantee or other indemnity in respect of such
obligation and assignable loans which exceed a total amount of EUR100m. A principal subsidiary is any subsidiary of
the issuer who represents at least 5% of the total assets and/or EBITDA of the group, as determined by reference to
the latest audited consolidated financial statements of the group. The group refers to the issuers and its subsidiaries
from time to time, taken as a whole.
Put
None
Covenants
None
Other
Events of default include cross-default of the issuer and principal subsidiaries on financial indebtedness exceeding
EUR30m. Financial indebtedness means any indebtedness for borrowed money whether or not represented or
evidenced by bonds, notes, other securities or certificates.
Source: Company data, HSBC

443

abc

European Credit Research


Corporate Bond Covenants
September 2010

Fortum
Bond
Coupon

Maturity

4.625%

Issuer

Guarantor

Out amt

Type

19 Nov 2010 Fortum Oyj

None

EUR500m

EMTN sr unsecured

5%

19 Nov 2013 Fortum Oyj

None

EUR500m

EMTN sr unsecured

4.625%

20 Mar 2014 Fortum Oyj

None

EUR750m

EMTN sr unsecured

4.5%

20 Jun 2016 Fortum Oyj

None

EUR750m

EMTN sr unsecured

6%

20 Mar 2019 Fortum Oyj

None

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any principal subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock, certificates or other debt securities which are, or are capable of
being, listed, quoted or traded on any stock exchange or in any regulated securities market. A principal subsidiary is
one whose total assets represent 10% or more of the consolidated total assets of the group as calculated in the
latest audited financial statements.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer and any principal subsidiary for obligations exceeding EUR50m. A
principal subsidiary is one whose total assets represent 10% or more of the consolidated total assets of the group as
calculated in the latest audited financial statements.
Source: Company data, HSBC

444

abc

European Credit Research


Corporate Bond Covenants
September 2010

Hera
Bond
Coupon

Maturity

Issuer

4.125%

16 Feb 2016 Hera SpA

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Tax call. Issuer call on 16 February 2008 and any time thereafter. Make whole at Euribor flat.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and material subsidiaries. Relevant indebtedness is
defined as notes, bonds, debentures, loan stock or other securities capable of being quoted, listed or dealt in on any
stock exchange, OTC or other securities market. A material subsidiary is a subsidiary whose consolidated revenues
or total assets account for 10% of the issuers total by reference to the latest audited consolidated accounts of the
issuer. The definition excludes permitted encumbrances defined as security interest created over limited-recourse
financing and securitisation subject to a cap of 10% of consolidated assets.
Put
Put at par on a put event defined as a rating downgrade resulting from a change of control and within a period of 180
days from the change of control event. A rating downgrade is defined as a downgrade to below investment grade, a
full rating withdrawal or a one-notch downgrade if the issuers rating is already non-investment grade by any rating
agency. These are defined as S&P, Moodys, Fitch and their successors.
Covenants
None
Other
Events of default include cross-default of the issuer or any material subsidiary subject to a EUR15m carve-out. A
material subsidiary is a subsidiary with consolidated revenues or total assets accounting for 10% of the issuers total
by reference to the latest audited consolidated accounts of the issuer. It is an event of default if the issuer or any of
its material subsidiaries ceases, or threatens to cease, to carry on a substantial part of its business, ie accounting for
at least 20% of consolidated assets or revenues.
Source: Company data, HSBC

445

abc

European Credit Research


Corporate Bond Covenants
September 2010

Hera
Bond
Coupon

Maturity

Issuer

4.5%

03 Dec 2019 Hera SpA

Guarantor

Out amt

Type

None

EUR500m

Senior unsecured

Call
Tax call. Issuer call on 3 December 2011 and any time thereafter at the greater of par or sum of the then-current
values of the remaining scheduled payments of principal and interest (not including any interest accrued on the notes
to, but excluding, the optional redemption date) discounted to the optional redemption date on an annual basis
(based on the actual number of days elapsed, divided by 365 or (in the case of a leap year) by 366) at the average of
the mid-market annual swap rate as determined by the reference dealer.
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer and material subsidiaries. Relevant indebtedness is
defined as notes, bonds, debentures, loan stock or other securities capable of being quoted, listed or dealt in on any
stock exchange, OTC or other securities market. A material subsidiary is a subsidiary with consolidated revenues or
total assets accounting for 10% of the issuers total by reference to the latest audited consolidated accounts of the
Issuer. The definition excludes permitted encumbrances defined as security interest created over limited-recourse
financing and securitisation subject to a cap of 10% of consolidated assets.
Put
Put at par on a put event defined as a rating downgrade resulting from a change of control and within a period of 180
days from the change of control event. A rating downgrade is defined as a downgrade to below investment grade, a
full rating withdrawal or a one-notch downgrade if the issuers rating is already non-investment grade by any rating
agency. These are defined as S&P, Moodys Fitch and their successors.
Covenants
None
Other
Events of default cover debt of the issuer and its material subsidiaries, with a EUR20m carve-out. Material subsidiary
is defined as any subsidiary whose total assets or net revenues represent not less than 10% of total assets/ net
revenues of the group.
Source: Company data, HSBC

446

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

6.375%
5.125%

Issuer

Guarantor

Out amt

Type

25 Nov 2011 Iberdrola Finanzas


SAU

Iberdrola SA

EUR1014m

EMTN sr unsecured

09 May 2013 Iberdrola Finanzas


SAU

Iberdrola SA

EUR836m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and the guarantor, which includes bonds, notes,
debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt with
on any stock exchange. It excludes permitted security, which is defined as any security created in respect of any
relevant indebtedness of a company that has merged with or been acquired by, the guarantor or its subsidiaries
provided it existed at the time of the merger/acquisition, was not created for the financing of the merger/acquisition,
did not increase in amount and was not extended following the merger/acquisition.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch within 270
days after a change of control announcement. A change of control is defined as the acquisition or control (indirectly
or directly) of more than 50% of the total voting rights of the guarantor or the right to appoint and/or remove
(indirectly or directly) all of the majority of the members of the guarantors board of directors or other governing body.
A rating downgrade is defined as a downgrade of the guarantors credit rating to non-investment grade or, if already
at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P) or when no credit rating is
assigned (other than temporarily).
Covenants
None
Other
Events of default includes cross-default of the issuer, guarantor or any relevant subsidiary on obligations exceeding
EUR50m. A relevant subsidiary is defined as a subsidiary of the guarantor in a country whose sovereign debt is
rated A or more by S&P and whose total assets or revenues or EBITDA represent 7% or more of the consolidated
total assets, revenues or EBITDA of the guarantor and its subsidiaries.
Source: Company data, HSBC

447

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

4.875%
7.5%

Issuer

Guarantor

Out amt

Type

04 Mar 2014 Iberdrola Finanzas


SAU

Iberdrola SA

EUR1500m

EMTN sr unsecured

25 Nov 2015 Iberdrola Finanzas


SAU

Iberdrola SA

EUR1150m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and the guarantor, which includes bonds, notes,
debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt with
on any stock exchange. It excludes permitted security, which is defined as any security created in respect of any
relevant indebtedness of a company that has merged with or been acquired by the guarantor or its subsidiaries,
provided it existed at the time of the merger/acquisition, was not created for the financing of the merger/acquisition,
did not increase in amount and was not extended following the merger/acquisition.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch within 270
days after a change of control announcement. A change of control is defined as the acquisition or control (indirectly
or directly) of more than 50% of the total voting rights of the guarantor or the right to appoint and/or remove
(indirectly or directly) all of the majority of the members of the guarantors board of directors or other governing body.
A rating downgrade is defined as a downgrade of the guarantors credit rating to non-investment grade or, if already
at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P) or when no credit rating is
assigned (other than temporarily).
Covenants
None
Other
Events of default includes cross-default of issuer, guarantor or any relevant subsidiary on obligations exceeding
EUR50m. A relevant subsidiary is defined as a subsidiary of the guarantor in a country whose sovereign debt is
rated A or more by S&P and whose total assets or revenues or EBITDA represent 7% or more of the consolidated
total assets, revenues or EBITDA of the guarantor and its subsidiaries.
Source: Company data, HSBC

448

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

5.625%
4.125%

Issuer

Guarantor

Out amt

Type

09 May 2018 Iberdrola Finanzas


SAU

Iberdrola SA

EUR750m

EMTN sr unsecured

23 Mar 2020 Iberdrola Finanzas


SAU

Iberdrola SA

EUR1100m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and the guarantor, which includes bonds, notes,
debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt with
on any stock exchange. It excludes permitted security, which is defined as any security created in respect of any
relevant indebtedness of a company that has merged with or been acquired by, the guarantor or its subsidiaries,
provided it existed at the time of the merger/acquisition, was not created for the financing of the merger/acquisition,
did not increase in amount and was not extended following the merger/acquisition.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch within 270
days after a change of control announcement. A change of control is defined as the acquisition or control (indirectly
or directly) of more than 50% of the total voting rights of the guarantor or the right to appoint and/or remove
(indirectly or directly) all of the majority of the members of the guarantors board of directors or other governing body.
A rating downgrade is defined as a downgrade of the guarantors credit rating to non-investment grade or, if already
at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P) or when no credit rating is
assigned (other than temporarily).
Covenants
None
Other
Events of default includes cross-default of issuer, guarantor or any relevant subsidiary on obligations exceeding
EUR50m. A relevant subsidiary is defined as a subsidiary of the guarantor in a country whose sovereign debt is
rated A or more by S&P and whose total assets or revenues or EBITDA represent 7% or more of the consolidated
total assets, revenues or EBITDA of the guarantor and its subsidiaries.
Source: Company data, HSBC

449

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

6%

01 Jul 2022

Iberdrola Finanzas
SAU

Iberdrola SA

GBP200m

EMTN sr unsecured

7.375%

29 Jan 2024 Iberdrola Finanzas


SAU

Iberdrola SA

GBP500m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and the guarantor, which includes bonds, notes,
debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt with
on any stock exchange. It excludes permitted security, which is defined as any security created in respect of any
relevant indebtedness of a company that has merged with or been acquired by the guarantor or its subsidiaries,
provided it existed at the time of the merger/acquisition, was not created for the financing of the merger/acquisition,
did not increase in amount and was not extended following the merger/acquisition.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch within 270
days after a change of control announcement. A change of control is defined as the acquisition or control (indirectly
or directly) of more than 50% of the total voting rights of the guarantor or the right to appoint and/or remove
(indirectly or directly) all of the majority of the members of the guarantors board of directors or other governing body.
A rating downgrade is defined as a downgrade of the guarantors credit rating to non-investment grade or, if already
at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P) or when no credit rating is
assigned (other than temporarily).
Covenants
None
Other
Events of default includes cross-default of issuer, guarantor or any relevant subsidiary on obligations exceeding
EUR50m. A relevant subsidiary is defined as a subsidiary of the guarantor in a country whose sovereign debt is
rated A or more by S&P and whose total assets or revenues or EBITDA represent 7% or more of the consolidated
total assets, revenues or EBITDA of the guarantor and its subsidiaries.
Source: Company data, HSBC

450

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

4.875%
3.5%

Issuer

Guarantor

Out amt

Type

18 Feb 2013 Iberdrola International Iberdrola SA


BV

EUR750m

EMTN sr unsecured

22 Jun 2015 Iberdrola Finanzas


SAU

EUR750m

Senior unsecured

Iberdrola SA

Call
Tax call.
Negative pledge
Negative pledge covers bonds, notes, debentures and loan stocks and other securities issued by the issuer and the
guarantor. Negative pledge includes Spanish Escritura Pblica but excludes permitted encumbrances, which are
defined as the mortgages created from 1953 to June 1967 by the guarantor.
Put
None
Covenants
None
Other
Events of default include default of the issuer, guarantor subject to a carve-out of USD5m and the insolvency of the
issuer, guarantor and relevant subsidiaries . A relevant subsidiary is directly or indirectly controlled or owned more
than 50% by the guarantor and its net worth is higher than EUR6.01m
Source: Company data, HSBC

451

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

Issuer

Guarantor

8.375%

20 Feb 2017 Scottish Power UK Plc None

Out amt

Type

GBP200m

Senior unsecured

Call
Spens call from 24/3/01. Ref UKT 8% 2015.
Negative pledge
Negative pledge for public debt only. Also not covered are issues with maturities > 20/2/17 and with aggregate
principal not more than the greater of GBP250m or 20% of capital and reserves.
Put
Bondholder put at par if restructuring event and rating downgrade to below investment grade within 90 days.
Restructuring event is defined as loss of Issuer licence or Manweb PES licence, major modification to the licence(s),
termination of the pooling and settling agreements (unless replaced with alternative) or legislation changing the
powers or duties of the Secretary of State for Trade and Industry and/or the Director General of Electricity Supply.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, in the latest audited financial statements. Excludes project finance
indebtedness.
Source: Company data, HSBC

452

abc

European Credit Research


Corporate Bond Covenants
September 2010

Iberdrola
Bond
Coupon

Maturity

Issuer

6.75%

29 May 2023 Scottish Power Plc

Guarantor

Out amt

Type

None

GBP250m

EMTN sr unsecured

Call
(i) Spens call reference UKT 8% 2021; or (ii) tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any wholly owned subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock, or other securities which are quoted, listed or ordinarily dealt on any
stock exchange or over-the-counter or other securities market. Excludes debt that has initial maturity of 26 years or
more, and with a maximum aggregate of the greater of GBP200m and 20% of capital and reserves, as well as
project finance indebtedness.
Put
A put event occurs when there is a restructuring event and either a rating downgrade or negative rating event, and
the event is deemed to be materially prejudicial to bondholders. A restructuring event is defined as the loss or
modification of licence, the loss or modification of the pooling and settlement agreement, or a change in legislation
removing the Secretary of State for Trade and Industry from duties. Also includes the case where the appointment of
Southern Water Services Limited as water and sewerage undertaker is terminated.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, in the latest audited financial statements. Excludes project finance
indebtedness.
Source: Company data, HSBC

453

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

FRN

5.5%

Issuer

Guarantor

Out amt

Type

18 Jan 2012 National Grid Plc


(ex National Grid
Transco Plc)

None

EUR643m

Senior unsecured

24 Jul 2013

None

GBP263m

EMTN sr unsecured

National Grid Plc


(ex National Grid
Transco Plc)

Call
Tax call.
Negative pledge
None
Put
If there is a National Grid (ex NGT) restructuring event and either a rating downgrade or negative rating event, the
instrumentholders put option may be exercised. An NG restructuring event occurs when the ratio of operating profit
from disposed assets exceeds 50% of consolidated operating profit pre disposals over a 36m period. A rating
downgrade is lowering the rating from investment grade to non-investment grade or, if the rating is already noninvestment grade, then lowering the rating by one further category. A negative rating event occurs when the issuer is
unable to obtain an investment-grade rating or does not seek to obtain a rating.
Covenants
Restrictions on asset disposals (see bondholder put).
Other
Events of default include cross-default on any relevant indebtedness of the issuer and principal subsidiaries that
exceeds GBP50m for the period up to 31 March 2001, and that exceeds GBP100m thereafter. Principal subsidiaries
are NGG (ex Transco Plc), NGET (ex National Grid Co Plc) and National Grid USA.
Source: Company data, HSBC

454

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

4.125%

Issuer

Guarantor

Out amt

Type

21 Mar 2013 National Grid Plc


(ex National Grid
Transco Plc)

None

EUR1000m

Senior unsecured

5%

02 Jul 2018

National Grid Plc


(ex National Grid
Transco Plc)

None

EUR600m

EMTN sr unsecured

4.375%

10 Mar 2020 National Grid Plc


(ex National Grid
Transco Plc)

None

EUR500m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of National Grid Plc (ex NGT), which includes bonds, notes,
debentures, loan stock, or other securities which are, or are capable of being, listed, quoted or ordinarily dealt on any
stock exchange.
Put
If there is a National Grid (ex NGT) restructuring event and either a rating downgrade or negative rating event, the
instrumentholders put option may be exercised. An NG restructuring event occurs when the ratio of operating profit
from disposed assets exceeds 50% of consolidated operating profit pre-disposals over a 36m period. A rating
downgrade is lowering the rating from investment grade to non-investment grade or, if the rating is already noninvestment grade, then lowering the rating by one further category. A negative rating event occurs when the issuer is
unable to obtain an investment-grade rating or does not seek to obtain a rating.
Covenants
Restrictions on asset disposals (see bondholder put).
Other
Events of default include cross-default on any relevant indebtedness of the issuer and principal subsidiaries that
exceeds GBP50m for the period up to 31 March 2001, and that exceeds GBP100m thereafter. Principal subsidiaries
are NGG (ex Transco Plc), NGET (ex National Grid Co Plc) and National Grid USA.
Source: Company data, HSBC

455

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

6.125%
6.5%

Issuer

Guarantor

Out amt

Type

15 Apr 2014 National Grid plc

None

GBP349m

EMTN sr unsecured

22 Apr 2014 National Grid plc

None

EUR578m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of National Grid plc, which includes bonds, notes, debentures, loan
stock, or other securities which are, or are capable of being, listed, quoted or ordinarily dealt on any stock exchange.
Put
If there is a National Grid (ex NGT) restructuring event and either a rating downgrade or negative rating event, the
instrumentholders put option may be exercised. An NG restructuring event occurs when the ratio of operating profit
from disposed assets exceeds 50% of consolidated operating profit pre-disposals over a 36m period. A rating
downgrade is lowering the rating from investment grade to non-investment grade or, if the rating is already noninvestment grade, then lowering the rating by one further category. A negative rating event occurs when the issuer is
unable to obtain an investment grade rating or does not seek to obtain a rating.
Covenants
Restrictions on asset disposals (see bondholder put).
Other
Events of default include cross-default of issuer and principal subsidiaries on any relevant indebtedness that
exceeds GBP50m for the period up to 31 March 2017, and that exceeds GBP100m thereafter. Principal subsidiaries
are National Grid Gas plc, NGET and National Grid USA.
Source: Company data, HSBC

456

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

6.625%

7.375%

Issuer

Guarantor

Out amt

Type

28 Jan 2014 National Grid


Electricity
Transmission pic

None

EUR600m

EMTN sr unsecured

13 Jan 2031 National Grid


Electricity
Transmission plc

None

GBP379m

EMTN sr unsecured

Call
Tax call.
Negative pledge
None
Put
If there is a NGET restructuring event and either a rating downgrade or negative rating event by S&P/Moodys, the
instrument holders put option may be exercised. NGET restructuring event is: (i) revocation of the Electricity
Transmission Licence; (ii) a modification of the Electricity Transmission Licence that is not materially prejudicial; or
(iii) a removal, reduction or qualification of the duties/powers of Secretary of State for Trade and Industry or
equivalent and/ or Gas & Electricity Markets Authority that is not materially prejudicial. A rating downgrade is deemed
to be a lowering of the rating from investment grade to non-investment grade, a rating withdrawal or, if the rating is
already non-investment grade, then a lowering of the rating by one further category. A negative rating event occurs
when the issuer is unable to obtain an investment-grade rating or does not seek to obtain a rating.
Covenants
None
Other
Events of default include cross-default of issuer on any relevant indebtedness that exceeds GBP50m for the period
up to 31 March 2017, and that exceeds GBP100m thereafter.
Source: Company data, HSBC

457

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

Issuer

Guarantor

6.5%

27 Jul 2028

None
National Grid
Electricity
Transmission Plc (ex
National Grid Co Plc)

Out amt

Type

GBP298m

Senior unsecured

Call
(i) 10% clean-up call if principal outstanding less than GBP36m; or (ii) tax call.
Negative pledge
None
Put
If there is a restructuring event and either a rating downgrade or negative rating event, the instrumentholders put
option may be exercised. A restructuring event is: (i) revocation of the Electricity Transmission Licence; (ii) a
modification of the Electricity Transmission Licence that is not materially prejudicial; or (iii) a termination of DTI/Gas
& Electricity Markets Authority that is not materially prejudicial. A rating downgrade is lowering the rating from
investment grade to non-investment grade or, if the rating is already non-investment grade, then lowering the rating
by one further category. A negative rating event occurs when the Issuer is unable to obtain an investment-grade
rating or does not seek to obtain a rating.
Covenants
None
Other
Events of default include cross-default on any relevant indebtedness of the issuer that exceeds GBP40m. Relevant
debt is defined as bonds, notes, debentures, loan stock, or other securities which are, or are capable of being, listed,
quoted or ordinarily dealt on any stock exchange.
Source: Company data, HSBC

458

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

Issuer

Guarantor

FRN

03 Apr 2036 National Grid


None
Electricity
Transmission Plc (ex
National Grid Co Plc)

Out amt

Type

GBP200m

Senior unsecured

Call
Tax call.
Negative pledge
None
Put
If there is a NGET (ex NGC) restructuring event and either a rating downgrade or negative rating event, the
instrumentholders put option may be exercised. An NGET restructuring event is: (i) revocation of the Electricity
Transmission Licence; (ii) a modification of the Electricity Transmission Licence that is not materially prejudicial; or
(iii) a termination of DTI/Gas & Electricity Markets Authority that is not materially prejudicial. A rating downgrade is
lowering the rating from investment grade to non-investment grade or, if the rating is already non-investment grade,
then lowering the rating by one further category. A negative rating event occurs when the issuer is unable to obtain
an investment-grade rating or does not seek to obtain a rating.
Covenants
None
Other
Events of default include cross-default on any relevant indebtedness that exceeds GBP50m for the period up to 31
March 2001, and that exceeds GBP100m thereafter. The indebtedness applies to NGET (ex NGC) only.
Source: Company data, HSBC

459

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

5.125%

Issuer

Guarantor

Out amt

Type

14 May 2013 National Grid Gas plc None

EUR800m

EMTN sr unsecured

6%

07 Jun 2017 National Grid Gas Plc None


(ex Transco Plc)

GBP300m

EMTN sr unsecured

6.375%

03 Mar 2020 National Grid Gas plc None

GBP358m

EMTN sr unsecured

7%

16 Dec 2024 National Grid Gas


None
Holdings Plc (ex
Transco Holdings Plc)

GBP300m

Senior unsecured

8.75%

27 Jun 2025 National Grid Gas Plc None


(ex Transco Plc)

GBP125m

Senior unsecured

FRN

17 Oct 2036 National Grid Gas Plc None


(ex Transco Plc)

GBP300m

EMTN sr unsecured

Call
Tax call, indexation call (if index linked) 2024 bond: Spens call reference UKT 8% 2021; 2025 bond: Spens call
reference UKT 8.75% 2017.
Negative pledge
None
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

460

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

FRN

Issuer

Guarantor

Out amt

Type

12 Jan 2037 National Grid Gas Plc None


(ex Transco Plc)

GBP140m

EMTN sr unsecured

FRN

20 Feb 2037 National Grid Gas Plc None


(ex Transco Plc)

GBP100m

EMTN sr unsecured

FRN

28 Aug 2037 National Grid Gas Plc None


(ex Transco Plc)

GBP100m

EMTN sr unsecured

6%

13 May 2038 National Grid Gas Plc None


(ex Transco Plc)

GBP457m

EMTN sr unsecured

FRN

04 Apr 2039 National Grid Gas Plc None


(ex Transco Plc)

GBP100m

EMTN sr unsecured

FRN

28 Jun 2046 National Grid Gas Plc None


(ex Transco Plc)

GBP115m

EMTN sr unsecured

Call
Tax call, indexation call (if index linked) 2024 bond: Spens call reference UKT 8% 2021; 2025 bond: Spens call
reference UKT 8.75% 2017.
Negative pledge
None
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

461

abc

European Credit Research


Corporate Bond Covenants
September 2010

National Grid
Bond
Coupon

Maturity

Issuer

Guarantor

5.875%

02 Feb 2024 National Grid


None
Electricity
Transmission Plc (ex
National Grid Co Plc)

Out amt

Type

GBP450m

Senior unsecured

Call
(i) 10% clean-up call if principal outstanding less than GBP45m; or (ii) Tax call.
Negative pledge
None
Put
If there is a restructuring event and either a rating downgrade or negative rating event, the instrumentholders put
option may be exercised. Restructuring event is: (i) revocation of Electricity Transmission Licence; (ii) modification of
the Electricity Transmission Licence that is not materially prejudicial, or (iii) termination of DTI/Gas & Electricity
Markets Authority that is not materially prejudicial. A rating downgrade is lowering the rating from investment grade
to non-investment grade or, if the rating is already non-investment grade, then lowering the rating by one further
category. A negative rating event occurs when the issuer is unable to obtain an investment-grade rating or does not
seek to obtain a rating.
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

462

abc

European Credit Research


Corporate Bond Covenants
September 2010

Northern Ireland Energy Holdings


Bond
Coupon

Maturity

Issuer

Guarantor

5.5%

10 Jul 2017

Phoenix Natural Gas Phoenix Distribution


Finance plc
Holdings Ltd

Out amt

Type

GBP275m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers all debt other than in respect of permitted security.
Put
Put at par if there is a regulatory put event occurs, which is defined as when there is a restructuring event, a negative
certification is made in respect of such restructuring event, and either a rating downgrade or a negative rating event
occurs within the restructuring period.
Covenants
Net debt to TRV(total regulatory value) ratio to be less than 95%.
Other
Events of default include cross-acceleration of the issuer or any of the guarantors on obligations of GBP5m (or
equivalent in any other currencies) or above.
Source: Company data, HSBC

463

abc

European Credit Research


Corporate Bond Covenants
September 2010

REN
Bond
Coupon

Maturity

Issuer

10 Dec 2013 Redes Energeticas


6.375%
Step Up
Nacionais SGPS (see Other)
REN

Guarantor

Out amt

Type

None

EUR800m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, which includes bonds, notes, debentures, debenture
stock, loan stock, certificates or other debt securities which are, or are capable of being, listed, quoted or traded on
any stock exchange or in any regulated securities market and any guarantee or indemnity in respect of any such
indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch within the 120
days after a change of control announcement. A change of control is defined as the acquisition or control (indirectly
or directly) of more than 50% of the issued voting share capital of the issuer. A rating downgrade is defined as a
downgrade of the issuers credit rating to non-investment grade or, if already at non-investment grade, a downgrade
of one full rating notch (eg BB+ to BB by S&P) or when no credit rating is assigned.
Covenants
None
Other
Events of default include cross-default of issuer and material subsidiaries on any obligations that exceed EUR40m.
Material subsidiaries are defined as subsidiaries of the issuer that represent not less than 10% of the consolidated
total assets/revenues of the group taken as a whole, calculated by reference to the then most recent consolidated
financial statements. Coupon steps up by 25bp for each of Moodys or S&P one-notch downgrade to below A3/A-.
The maximum increase is 150bp (in the case of a downgrade to Baa3/BBB- or lower by both agencies).
Source: Company data, HSBC

464

abc

European Credit Research


Corporate Bond Covenants
September 2010

REE
Bond
Coupon

Maturity

Issuer

4.75%

18 Sep 2013 Red Elctrica de


Espaa Finance BV

Guarantor

Out amt

Type

Red Elctrica de
Espaa Finance SA

EUR800m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of issuer and guarantor, which is in the form of or represented by any
bond, note, debenture, debenture stock, loan stock, certificate or other instrument which is, or is capable of being,
listed, quoted or traded on any stock exchange or in any securities market, including any over-the-counter market.
Put
None
Covenants
None
Other
Events of default include cross default of issuer or guarantor for obligations exceeding EUR10m.
Source: Company data, HSBC

465

abc

European Credit Research


Corporate Bond Covenants
September 2010

RWE
Bond
Coupon

Maturity

2.5%

Issuer

Guarantor

Out amt

Type

16 Sep 2011 RWE Finance B.V.

RWE AG

EUR1500m

EMTN sr unsecured

6.125%

26 Oct 2012 RWE Finance BV

RWE AG

EUR1808m

EMTN sr unsecured

6.375%

03 Jun 2013 RWE Finance BV

RWE AG

GBP630m

EMTN sr unsecured

4.625%

23 Jul 2014

RWE Finance BV

RWE AG

EUR530m

EMTN sr unsecured

6.25%

20 Apr 2016 RWE Finance BV

RWE AG

EUR850m

EMTN sr unsecured

5.125%

23 Jul 2018

RWE Finance BV

RWE AG

EUR980m

EMTN sr unsecured

6.5%

20 Apr 2021 RWE Finance BV

RWE AG

GBP570m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness of issuer, guarantor and principal subsidiary, which includes
bonds, or other instruments which are, or are capable of being, listed, quoted, dealt in or traded on any stock
exchange, or in any organised market and any guarantee or other indemnity in respect of such obligation. A principal
subsidiary is any subsidiary of the guarantor whose sales or total assets amount to at least 5% of the overall sales or
total assets, respectively, of the guarantor and its consolidated subsidiaries, as shown in its latest audited,
consolidated group accounts.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or principal subsidiary on capital market indebtedness
exceeding EUR50m. A principal subsidiary is any subsidiary of the guarantor whose sales or total assets amount to
at least 5% of the overall sales or total assets, respectively, of the guarantor and its consolidated subsidiaries, as
shown in its latest audited, consolidated group accounts.
Source: Company data, HSBC

466

abc

European Credit Research


Corporate Bond Covenants
September 2010

RWE
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.5%

06 Jul 2022

RWE Finance B.V.

RWE AG

GBP500m

EMTN sr unsecured

5.625%

06 Dec 2023 RWE Finance BV

RWE AG

GBP487.5m

EMTN sr unsecured

6.25%

03 Jun 2030 RWE Finance BV

RWE AG

GBP760m

EMTN sr unsecured

6.125%

06 Jul 2039

RWE AG

GBP1000m

EMTN sr unsecured

RWE Finance B.V.

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness of issuer, guarantor and principal subsidiary, which includes
bonds or other instruments which are, or are capable of being, listed, quoted, dealt in or traded on any stock
exchange, or in any organised market and any guarantee or other indemnity in respect of such obligation. A principal
subsidiary is any subsidiary of the guarantor whose sales or total assets amount to at least 5% of the overall sales or
total assets, respectively, of the guarantor and its consolidated subsidiaries, as shown in its latest audited,
consolidated group accounts.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or principal subsidiary on capital market indebtedness
exceeding EUR50m. A principal subsidiary is any subsidiary of the guarantor whose sales or total assets amount to
at least 5% of the overall sales or total assets, respectively, of the guarantor and its consolidated subsidiaries, as
shown in its latest audited, consolidated group accounts.
Source: Company data, HSBC

467

abc

European Credit Research


Corporate Bond Covenants
September 2010

RWE
Bond
Coupon

Maturity

5.75%
5%

Issuer

Guarantor

Out amt

Type

20 Nov 2013 RWE Finance B.V.

RWE AG

EUR1000m

EMTN sr unsecured

10 Feb 2015 RWE Finance B.V.

RWE AG

EUR2000m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers capital market indebtedness of issuer, guarantor and principal subsidiary, which includes
bonds, or other instruments which are, or are capable of being, listed, quoted, dealt in or traded on any stock
exchange, or in any organised market and any guarantee or other indemnity in respect of such obligation. A principal
subsidiary is any subsidiary of the guarantor whose sales or total assets amount to at least 5% of the overall sales or
total assets, respectively, of the guarantor and its consolidated subsidiaries, as shown in its latest audited,
consolidated group accounts.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys or S&P within 180 days after
a change of control announcement. A change of control is defined as the acquisition or control, indirect or direct,
legal or beneficial ownership or entitlement of more than 50% of the total voting shares of the guarantor. A rating
downgrade is defined as a downgrade of the guarantors credit rating to non-investment grade (BB+ or worse for
S&P, Ba1 or worse for Moodys) or when no credit rating is assigned (other than temporarily).
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or principal subsidiary on capital market indebtedness
exceeding EUR50m. A principal subsidiary is any subsidiary of the guarantor whose sales or total assets amount to
at least 5% of the overall sales or total assets, respectively, of the guarantor and its consolidated subsidiaries, as
shown in its latest audited, consolidated group accounts.
Source: Company data, HSBC

468

abc

European Credit Research


Corporate Bond Covenants
September 2010

RWE
Bond
Coupon

Maturity

6.625%
6.5%

Issuer

Guarantor

Out amt

Type

31 Jan 2019 RWE Finance B.V.

RWE AG

EUR1000m

EMTN sr unsecured

10 Aug 2021 RWE Finance B.V.

RWE AG

EUR1000m

EMTN sr unsecured

Call
Tax call
Negative pledge
Negative pledge covers capital market indebtedness of issuer, guarantor and principal subsidiary which includes
bonds, or other instruments which are, or are capable of being, listed, quoted, dealt in or traded on any stock
exchange, or in any organised market and any guarantee or other indemnity in respect of such obligation. A principal
subsidiary is any subsidiary of the guarantor whose sales or total assets amount to at least 5% of the overall sales or
total assets, respectively, of the guarantor and its consolidated subsidiaries, as shown in its latest audited,
consolidated group accounts.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys or S&P within 180 days after
a change of control announcement. A change of control is defined as the acquisition or control, indirect or direct,
legal or beneficial ownership or entitlement of more than 50% of the total voting shares of the guarantor. A rating
downgrade is defined as a downgrade of the guarantors credit rating to non-investment grade (BB+ or worse for
S&P, Ba1 or worse for Moodys) or when no credit rating is assigned (other than temporarily).
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or principal subsidiary on capital market indebtedness
exceeding EUR50m. A principal subsidiary is any subsidiary of the guarantor whose sales or total assets amount to
at least 5% of the overall sales or total assets, respectively, of the guarantor and its consolidated subsidiaries, as
shown in its latest audited, consolidated group accounts.
Source: Company data, HSBC

469

abc

European Credit Research


Corporate Bond Covenants
September 2010

RWE
Bond
Coupon

Maturity

Issuer

5.75%

14 Feb 2033 RWE AG

Guarantor

Out amt

Type

None

EUR600m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers bonds, and other instruments that are or are capable of being listed, quoted and dealt on an
exchange. It also applies to principal subsidiaries defined as consolidated companies, which account for 5% of group
sales and 5% of overall total assets in the latest audited statements. Excludes bank debt and project finance.
Put
None
Covenants
None
Other
Events of default include cross-default on amounts owed by the issuer, or any principal subsidiary for an amount
greater than EUR50m. Principal subsidiaries are defined as consolidated companies which account for 5% of group
sales and 5% of overall total assets in the latest audited statements .
Source: Company data, HSBC

470

abc

European Credit Research


Corporate Bond Covenants
September 2010

SP AusNet
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

26 Jun 2018 SPI Electricity & Gas SPI Networks (Gas) Pty GBP250m
7.125%
Step Up
Australia Holding Pty Ltd, SPI Electricity Pty
(see Other)
Ltd
Ltd, SPI Networks Pty
Ltd, SPI PowerNet Pty
Ltd and SPI Australia
Finance Pty Ltd.

Type
EMTN sr unsecured

Call
Spens call ref UKT 5% 2018. Also callable for taxation reasons.
Negative pledge
Negative pledge covers capital market indebtedness of the issuer and the guarantors. Capital market indebtedness
is defined as bonds or other securities which are quoted, listed or ordinarily dealt on any stock exchange or over-thecounter or other securities market and having an original maturity of more than 365 days from its date of issue, or
any guarantee or indemnity in respect of capital market indebtedness.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer or guarantors for obligations (other than subordinated debt)
exceeding AUD30m, except for obligations enforced against any property of the issuer or guarantor for an amount
exceeding AUD20m and likely to have a material adverse effect on the issuers or any guarantors ability to meet its
obligations. Coupon steps up by 25bp when downgraded to Baa1/BBB+, by 50bp when downgraded to Baa3/BBBand 100bp when downgraded to Ba1/BB+ or lower by Moodys or S&P. Coupon steps up by 200bp if downgraded
by both agencies. If the rating is only assigned by one agency, the step up will be twice the applicable increase
stated. If not assigned by both agencies, the initial coupon 7.125% will be stepped up by 200bp.
Source: Company data, HSBC

471

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

Issuer

6.125%

29 Jul 2013

5.75%

Guarantor

Out amt

Type

Scottish and Southern None


Energy plc

EUR600m

EMTN sr unsecured

05 Feb 2014 Scottish and Southern None


Energy plc

GBP700m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any relevant subsidiaries which includes notes,
bonds, debentures, debenture stock, loan stock or other securities, whether issued for cash or in whole or in part for
a consideration other than cash, and which, with the agreement of the person issuing the same, are quoted, listed or
ordinarily dealt in on any stock exchange or recognised over-the-counter or other securities. Excludes debt which
has an initial maturity of 20 years or more and an aggregate amount outstanding at any time not exceeding the
greater of GBP250m and 20% of capital and reserves, as well as project finance indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade or negative rating event by Moodys or
S&P during the period commencing on the relevant announcement date and ending 90 days after the change of
control. A change of control is defined by interest in more than 50% of the issued or allotted ordinary share capital of
the issuer or shares in the capital of the issuer carrying more than 50% of the voting rights normally exercisable at a
general meeting of the issuer. A rating downgrade is defined as a downgrade of the guarantors credit rating to noninvestment grade or, if already at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P)
or when no credit rating is assigned (other than temporarily). A negative rating event shall be deemed to have
occurred if no rating has been assigned and the issuer does not seek to obtain a rating or if it is not at least of
investment grade by the end of the CoC period.
Covenants
None
Other
Events of default include cross-acceleration of the issuer and principal subsidiaries on obligations exceeding
GBP20m. Principal subsidiaries are defined as any relevant subsidiary or any subsidiary of the issuer that represents
20% or more of the consolidated profits on ordinary activities or net assets of the issuer, as calculated by reference
to the latest audited consolidated financial statements of the issuer and of such subsidiary.
Source: Company data, HSBC

472

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

8.375%
6.25%

Issuer

Guarantor

Out amt

Type

20 Nov 2028 Scottish and Southern None


Energy plc

GBP500m

EMTN sr unsecured

27 Aug 2038 Scottish and Southern None


Energy plc

GBP350m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any relevant subsidiaries which includes notes,
bonds, debentures, debenture stock, loan stock or other securities, whether issued for cash or, in whole or in part, for
a consideration other than cash, and which, with the agreement of the person issuing the same, are quoted, listed or
ordinarily dealt in on any stock exchange or recognised over-the-counter or other securities market. Excludes debt
which has an initial maturity of 20 years or more, and an aggregate amount outstanding at any time not exceeding
the greater of GBP250m and 20% of capital and reserves, as well as project finance indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade or negative rating event by Moodys or
S&P during the period commencing on the relevant announcement date and ending 90 days after the change of
control. A change of control is defined by interest in more than 50% of the issued or allotted ordinary share capital of
the issuer or shares in the capital of the issuer carrying more than 50% of the voting rights normally exercisable at a
general meeting of the issuer. A rating downgrade is defined as a downgrade of the guarantors credit rating to noninvestment grade or, if already at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P)
or when no credit rating is assigned (other than temporarily). A negative rating event shall be deemed to have
occurred if no rating has been assigned and the issuer does not seek to obtain a rating or if it is not at least of
investment grade by the end of the CoC period.
Covenants
None
Other
Events of default includes cross acceleration of the issuer and principal subsidiaries on obligations exceeding
GBP20m. Principal Subsidiaries are defined as any relevant subsidiary or any subsidiary of the issuer that
represents 20% or more of the consolidated profits on ordinary activities or net assets of the issuer, as calculated by
reference to the latest audited consolidated financial statements of the issuer and of such subsidiary.
Source: Company data, HSBC

473

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

Issuer

5.875%

22 Sep 2022 Scottish & Southern


Energy

Guarantor

Out amt

Type

None

GBP300m

Senior unsecured

Call
(i) 6% clean-up call if principal outstanding less than GBP15m; (ii) spens call reference UKT 8% 2021 or (iii) tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any wholly owned subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock, or other securities which are quoted, listed or ordinarily dealt on any
stock exchange or over-the-counter or other securities market. Excludes debt that has initial maturity of 22
September 2022 or later and an aggregate amount not exceeding the greater of GBP250m and 20% of capital and
reserves, as well as project finance indebtedness.
Put
A put event occurs when there is a restructuring event and either a rating downgrade or negative rating event, and
the event is deemed to be materially prejudicial to bondholders. A restructuring event is defined as the loss or
modification of licence, the loss or modification of the pooling and settlement agreement, or a change in legislation
removing the Secretary of State for Trade and Industry from duties.
Covenants
None
Other
Events of default include cross-default of the issuer or any principal subsidiary for obligations exceeding the greater
of GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, in the latest audited financial statements.
Source: Company data, HSBC

474

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

Issuer

Guarantor

5.5%

07 Jun 2032 Southern Electric


None
Power Distribution Plc

Out amt

Type

GBP350m

Senior unsecured

Call
(i) 6% clean-up call if principal outstanding less than GBP15m; (ii) Spens call reference UKT 4.25% 2032; or (iii) tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any wholly owned subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock, or other securities which are quoted, listed or ordinarily dealt on any
stock exchange or over-the-counter or other securities market. Excludes debt that has initial maturity of 7 June 2032
or later and an aggregate amount not exceeding the greater of GBP250m and 20% of capital and reserves, as well
as project finance indebtedness.
Put
A put event occurs when there is a restructuring event and either a rating downgrade or negative rating event, and
the event is deemed to be materially prejudicial to bondholders. A restructuring event is defined as the loss or
modification of the distribution licence, the loss or modification of the balancing and settlement code, or a change in
legislation removing the Secretary of State for Trade and Industry from duties.
Covenants
None
Other
Events of default include cross default of Issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, in the latest audited financial statements.
Source: Company data, HSBC

475

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

Issuer

FRN

20 Oct 2056 Scottish HydroElectric PD plc

Guarantor

Out amt

Type

None

GBP100m

Senior unsecured

Call
Tax call, Indexation call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any wholly owned subsidiary, which includes bonds,
notes, debentures, debenture stock, loan stock, or other securities which are quoted, listed or ordinarily dealt on any
stock exchange or over-the-counter or other securities market. Excludes debt that has initial maturity of 20 October
2056 or later and an aggregate amount not exceeding of the greater of GBP100m and 20% of capital and reserves,
as well as project finance indebtedness.
Put
A put event occurs when there is a restructuring event and either a rating downgrade or negative rating event, and
the event is deemed to be materially prejudicial to bondholders. A restructuring event is defined as the loss or
modification of the distribution licence, the loss or modification of the balancing and settlement code, or a change in
legislation removing the Secretary of State for Trade and Industry from duties.
Covenants
None
Other
Events of default include cross-default of the issuer or any principal subsidiary for obligations exceeding the greater
of GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, in the latest audited financial statements.
Source: Company data, HSBC

476

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

Issuer

Guarantor

4.625%

20 Feb 2037 Southern Electric


None
Power Distribution Plc

Out amt

Type

GBP325m

Senior unsecured

Call
Spens call reference UKT4.25% 2036
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any relevant subsidiaries. Relevant indebtedness is
defined as bonds, notes, debentures, debenture stock, loan stock, or other securities which are quoted, listed or
ordinarily dealt on any stock exchange or over-the-counter or other securities market. Excludes debt that has initial
maturity falling after 20 February 2037 or later and an aggregate amount not exceeding of the greater of GBP250m
and 20% of capital and reserves, as well as project finance indebtedness. Relevant subsidiaries are defined as
wholly owned subsidiaries and guarantors or primary obligors under the restructuring event definition.
Put
Put at par plus accrued interest in case of a put event. A put event occurs when there is a restructuring event and
either a rating downgrade or negative rating event, or the restructuring event is deemed to be materially prejudicial to
bondholders. A restructuring event is defined as the loss or modification of the distribution licence, the loss or
modification of the balancing and settlement code, or a change in legislation removing the Secretary of State for
Trade and Industry from duties.
Covenants
None
Other
Events of default include cross default of issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is any relevant subsidiary and subsidiaries of the
issuer whose profits on ordinary activities before tax or net assets represent 20% or more of the consolidated profits
on ordinary activities before tax or consolidated net assets, in the latest audited financial statements.
Source: Company data, HSBC

477

abc

European Credit Research


Corporate Bond Covenants
September 2010

SSE
Bond
Coupon

Maturity

5%

Issuer

Guarantor

Out amt

Type

01 Oct 2018 Scottish and Southern None


Energy plc

GBP500m

EMTN sr unsecured

5.125%

02 Nov 2018 Southern Gas


Networks plc

None

GBP300m

EMTN sr unsecured

FRN

02 Nov 2039 Scotland Gas


Networks plc

None

GBP125m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and any relevant subsidiaries which includes notes,
bonds, debentures, debenture stock, loan stock or other securities, whether issued for cash or, in whole or in part, for
a consideration other than cash, and which, with the agreement of the person issuing the same, are quoted, listed or
ordinarily dealt in on any stock exchange or recognised over-the-counter or other securities market. Excludes debt
which has an initial maturity of 20 years or more and an aggregate amount outstanding at any time not exceeding the
greater of GBP250m and 20% of capital and reserves, as well as project finance indebtedness.
Put
Put at par following a change of control and followed by a rating downgrade or negative rating event by Moodys or
S&P during the period commencing on the relevant announcement date and ending 90 days after the change of
control. A change of control is defined by interest in more than 50% of the issued or allotted ordinary share capital of
the issuer or shares in the capital of the issuer carrying more than 50% of the voting rights normally exercisable at a
general meeting of the issuer. A rating downgrade is defined as a downgrade of the guarantors credit rating to noninvestment grade or, if already at non-investment grade, a downgrade of one full rating notch (eg BB+ to BB by S&P)
or when no credit rating is assigned (other than temporarily). A negative rating event shall be deemed to have
occurred if no rating has been assigned and the issuer does not seek to obtain a rating or if it is not at least of
investment grade by the end of the CoC period.
Covenants
None
Other
Events of default include cross-acceleration of issuer and principal subsidiaries on obligations exceeding GBP20m.
Principal subsidiaries are defined as any relevant subsidiary or any subsidiary of the issuer that represents 20% or
more of the consolidated profits on ordinary activities or net assets of the issuer, as calculated by reference to the
latest audited consolidated financial statements of the issuer and of such subsidiary.
Source: Company data, HSBC

478

abc

European Credit Research


Corporate Bond Covenants
September 2010

Statkraft
Bond
Coupon

Maturity

FRN

Issuer

Guarantor

Out amt

Type

22 Mar 2013 Statkraft A/S

None

EUR300m

Senior unsecured

5.5%

02 Apr 2015 Statkraft A/S

None

EUR500m

EMTN sr unsecured

4.625%

22 Sep 2017 Statkraft A/S

None

EUR600m

Senior unsecured

6.625%

02 Apr 2019 Statkraft A/S

None

EUR500m

EMTN sr unsecured

Call
Tax call/clean-up call (see put provision).
Negative pledge
Negative pledge covers the public debt of the issuer and excludes the interest in the power generation assets coowned by municipalities.
Put
Put at par plus accrued interest following a change of control and followed by a rating downgrade or negative rating
event by Moodys or S&P. The change of control period starts with the earlier of: (a) the date of the relevant change
of control; and (b) the date of the earliest relevant potential change of control announcement (if any) and ending 180
days after the public announcement of the change of control having occurred. A change of control is defined as
control in more than 50% of the issued share capital of the issuer or where the Kingdom of Norway controls (directly
or indirectly) less than 50.1% of the issued share capital of the issuer. A rating downgrade is defined as a downgrade
of the guarantors credit rating to non-investment grade or if already at non-investment grade, a downgrade of one
full rating notch (eg BB+ to BB by S&P) or when no credit rating is assigned. A negative rating event shall be
deemed to have occurred if no rating has been assigned and the issuer does not seek to obtain a rating or if it is not
at least of investment grade by the end of the CoC period. The issuer has a clean-up call if more than 95% of the
bonds have been tendered following the activation of the clause.
Covenants
None
Other
Event of default covers the debt of the issuer and its principal subsidiaries, subject to a USD30m carve-out. Material
change in business ie the issuer ceases, or threatens to cease, to carry on the whole or substantially the whole of
its business. A principal subsidiary is a subsidiary that accounts for 10% of consolidated gross operating revenues or
consolidated total assets by reference to the latest audited accounts. A report by two authorised signatories of the
issuer stating that, in their opinion, a subsidiary is or is not a principal subsidiary is binding on all parties subject to
the agreement of the trustee.
Source: Company data, HSBC

479

abc

European Credit Research


Corporate Bond Covenants
September 2010

TenneT
Bond
Coupon

Maturity

3.25%
4.5%

Issuer

Guarantor

Out amt

Type

09 Feb 2015 TenneT Holding BV

None

EUR500m

EMTN sr unsecured

09 Feb 2022 TenneT Holding BV

None

EUR500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and its material subsidiaries, which include bonds, notes,
debentures or other securities, which for the time being are, are intended to be or are capable of being quoted, listed
or dealt in or traded on any stock exchange or OTC or other securities market.
Put
None
Covenants
None
Other
Events of default cover debt of the issuer and its material subsidiaries. A cross-default provision is also applicable to senior
notes with amounts of no less than EUR50m (or equivalent in other currencies). A material subsidiary is defined as any
subsidiary which represents no less than 25% of total turnover of the issuer and its subsidiaries taken as a whole.
Source: Company data, HSBC

480

abc

European Credit Research


Corporate Bond Covenants
September 2010

TVO
Bond
Coupon

Maturity

Issuer

6%

27 Jun 2016 Teollisuuden Voima


Oy TVO

Guarantor

Out amt

Type

None

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and its respective subsidiaries, which includes bonds,
notes, debentures, debenture stock, loan stock or other securities that are quoted, listed, dealt in or traded on a
stock exchange or over-the-counter, or other recognised securities market. This excludes any permitted security
interest, which includes any security interest granted that secures project finance indebtedness only.
Put
None
Covenants
None
Other
Event of default include a cross-default of the issuer and its material subsidiaries on obligations exceeding EUR50m.
A material subsidiary is any subsidiary of the issuer which represents at least 5% of the total consolidated assets of
the issuer. A report by the auditors to the issuer stating that, in their opinion, a subsidiary is or is not at any particular
time a material subsidiary shall be conclusive and binding on all parties.
Source: Company data, HSBC

481

abc

European Credit Research


Corporate Bond Covenants
September 2010

Terna
Bond
Coupon

Maturity

4.25%

Issuer

Guarantor

Out amt

Type

28 Oct 2014 Terna Rete Elettrica None


Nazionale SpA

EUR600m

Senior unsecured

4.875%

03 Oct 2019 Terna Rete Elettrica None


Nazionale SpA

EUR600m

EMTN sr unsecured

FRN

15 Sep 2023 Terna Rete Elettrica None


Nazionale SpA

EUR500m

EMTN sr unsecured

4.9%

28 Oct 2024 Terna Rete Elettrica None


Nazionale SpA

EUR800m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers the Indebtedness of the issuer and material subsidiaries but excludes permitted encumbrances.
Indebtedness means bonds, notes, debentures, or other securities which are, or are intended to be, quoted, listed or
ordinarily dealt in on any stock exchange, OTC or regulated securities market. Permitted encumbrances include security
over the groups assets arising by law or existing at the time of issuance as well as project finance indebtedness. They
also include limited-recourse financing and securitisation subject to a limit of EUR400m or 10% of the groups net worth,
whichever is greater. A material subsidiary is defined as a subsidiary whose total assets represent at least 10% of
consolidated total assets by reference to the latest audited accounts. A report by two directors stating that a subsidiary is
or is not a material subsidiary is conclusive and binding on all parties.
Put
None
Covenants
None
Other
Events of default include a cross-default of the issuer or any principal subsidiary with a EUR20m carve-out. It is an
event of default if the issuer is dissolved or ceases, or threatens to cease, to carry out substantially all of its business
operations or disposes substantially all of its assets.
Source: Company data, HSBC

482

abc

European Credit Research


Corporate Bond Covenants
September 2010

Tokyo Electric Power


Bond
Coupon

Maturity

Issuer

Guarantor

4.5%

24 Mar 2014 Tokyo Electric Power None


Corp

Out amt

Type

EUR1000m

Senior secured

Call
Tax call/
Negative pledge
Negative pledge covers the indebtedness of the issuer, defined as bonds, notes, debentures and other securities
that are, or are intended to be, listed, quoted and dealt on an exchange or securities market outside Japan. Must
have maturity of >1 year from issue and more than 50% of principal must be initially offered outside Japan.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer for obligations exceeding the USD10m, with no reference to
subsidiaries.
Source: Company data, HSBC

483

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vattenfall
Bond
Coupon

Maturity

4.125%

Issuer

Guarantor

Out amt

Type

18 Mar 2013 Vattenfall Treasury AB Vattenfall AB

EUR500m

EMTN sr unsecured

5.75%

05 Dec 2013 Vattenfall Treasury AB Vattenfall AB

EUR850m

EMTN sr unsecured

4.25%

19 May 2014 Vattenfall Treasury AB Vattenfall AB

EUR1350m

EMTN sr unsecured

5.25%

17 Mar 2016 Vattenfall Treasury AB Vattenfall AB

EUR1100m

EMTN sr unsecured

6.75%

31 Jan 2019 Vattenfall Treasury AB Vattenfall AB

EUR650m

EMTN sr unsecured

6.125%

16 Dec 2019 Vattenfall Treasury AB Vattenfall AB

GBP350m

EMTN sr unsecured

6.25%

17 Mar 2021 Vattenfall Treasury AB Vattenfall AB

EUR1100m

EMTN sr unsecured

6.875%

15 Apr 2039 Vattenfall Treasury


AB/ Vattenfall AB

GBP1000m

EMTN sr unsecured

Vattenfall AB

Call
Tax call.
Negative pledge
Negative pledge covers securities of the issuer and the parent, which includes bonds, debentures, notes or other
securities which are or are to be quoted, listed, or traded on any stock exchange, over-the-counter or other securities
market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, parent or any principal subsidiary for obligations exceeding
USD50m. A principal subsidiary is defined as a subsidiary of the parent whose total profits before tax and
extraordinary items, or total tangible assets, represent 10% of more of the consolidated total profits before tax and
extraordinary items or consolidated total tangible assets.
Source: Company data, HSBC

484

abc

European Credit Research


Corporate Bond Covenants
September 2010

Vattenfall
Bond
Coupon

Maturity

5%
5.375%

Issuer

Guarantor

Out amt

Type

18 Jun 2018 Vattenfall Treasury AB Vattenfall AB

EUR500m

EMTN sr unsecured

29 Apr 2024 Vattenfall Treasury AB Vattenfall AB

EUR500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers securities of the issuer and the parent, which includes bonds, debentures, notes or other
securities which are or are to be quoted, listed, or traded on any stock exchange, over-the-counter or other securities
market.
Put
None
Covenants
None
Other
Events of default include cross default of issuer, parent or any principal subsidiary for obligations exceeding
USD10m. A principal subsidiary is defined as a subsidiary whose total profits before tax and extraordinary items or
total tangible assets represent 10% or more of the consolidated total profits before tax and extraordinary items or
consolidated total tangible assets.
Source: Company data, HSBC

485

abc

European Credit Research


Corporate Bond Covenants
September 2010

Verbund
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.75%

17 Apr 2015 Verbund-International sterreichische


EUR500m
Finance B.V.
ElektrizittswirtschaftsAG

EMTN sr unsecured

4.75%

16 Jul 2019

EMTN sr unsecured

Verbund International sterreichische


EUR840m
Finance BV
ElektrizittswirtschaftsAG

Type

Call
Tax call.
Negative pledge
Yes, but excludes bank debt and covers capital market indebtedness. Capital market indebtedness is defined as
obligation for the repayment of money in the form of bonds, notes, or any other similar securities that are or intended
to be quoted, listed or traded on any stock exchange or OTC market. This also includes money borrowed, liabilities
in respect of leases or hire purchase contracts and amounts raised under any other transaction having the
commercial effect of a borrowing in excess of EUR25m.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch. The change
of control period ends 120 days after the occurrence of the change of control. A change of control is any direct or
indirect ownership or entitlement of more than 50% of the voting shares of the guarantor. A rating downgrade is
defined as a downgrade of the guarantors credit rating to non-investment grade or, if already at non-investment
grade, a downgrade of one full rating notch, or when no credit rating is assigned.
Covenants
None
Other
Events of default include cross-default of issuer and guarantor on indebtedness in excess of EUR25m.
Source: Company data, HSBC

486

abc

European Credit Research


Corporate Bond Covenants
September 2010

WPD
Bond
Coupon

Maturity

5.875%

Issuer

Guarantor

Out amt

Type

25 Mar 2027 Western Power


Distribution

None

GBP250m

Senior unsecured

FRN

01 Dec 2053 Western Power


Distribution
(South West) plc

None

GBP105m

Senior unsecured

FRN

01 Dec 2056 Western Power


Distribution
(South West) plc

None

GBP120m

Senior unsecured

Call
Tax call, Indexation call (if index linked).
Negative pledge
Negative pledge covers: (i) bonds, notes, debentures, debenture stock, loan stock or other securities, which are or
are capable of being quoted, listed or ordinarily dealt in on any stock exchange or recognised over-the-counter or
other securities market; and (ii) monies borrowed or raised from, or any acceptance credit opened by, a bank,
building society or other financial institution; and (iii) any leasing or hire purchase agreement which would be treated
as a finance lease in the accounts of the relevant person. The pledge applies to debt issued by issuer and any
distribution subsidiary, which is defined as a subsidiary of the issuer that holds a distribution licence.
Put
Put event occurs when there is a Restructuring event and a rating downgrade (investment grade to non-investment
grade; if already non-investment grade, then one notch down) or negative rating event. A restructuring event is
defined as loss or modification of distribution licence for the issuer and any distribution subsidiary or if legislation is
enacted changing the powers of the Secretary of State for Trade and Industry and/or the Gas and Electricity Markets
Authority.
Covenants
The issuer shall not at any time make a distribution to shareholders unless net debt at such time does not exceed
85% of the regulatory asset base relating to the year in which the relevant distribution or grant is first declared or
made.
Other
Events of default include cross-default of Issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, as calculated in the latest audited financial statements.
Source: Company data, HSBC

487

abc

European Credit Research


Corporate Bond Covenants
September 2010

WPD
Bond
Coupon

Maturity

FRN

5.75%

Issuer

Guarantor

Out amt

Type

21 Dec 2037 Western Power


Distribution
(South Wales) plc

None

GBP225m

Senior unsecured

23 Mar 2040 Western Power


Distribution
(South Wales) plc

None

GBP200m

Senior unsecured

Call
Tax call; 2037 bond: Spens call ref UKT 4.25% 2036; 2040 bond: Spens call ref UKT 4.75% 2038.
Negative pledge
Negative pledge covers: (i) bonds, notes, debentures, debenture stock, loan stock or other securities, which are or
are capable of being quoted, listed or ordinarily dealt in on any stock exchange or recognised over-the-counter or
other securities market; and (ii) monies borrowed or raised from, or any acceptance credit opened by a bank,
building society or other financial institution; and (iii) any leasing or hire purchase agreement which would be treated
as a finance lease in the accounts of the relevant person. The pledge applies to debt issued by issuer and any
distribution subsidiary, which is defined as a subsidiary of the issuer that holds a distribution licence.
Put
Put event occurs when there is a restructuring event and a rating downgrade (investment grade to non-investment
grade; if already non-investment grade, then one notch down) or negative rating event. A restructuring event is
defined as loss or modification of distribution licence for the issuer and any distribution subsidiary or if legislation is
enacted changing the powers of the Secretary of State for Trade and Industry and/or the Gas and Electricity Markets
Authority.
Covenants
The issuer shall not at any time make a distribution to shareholders unless net debt at such time does not exceed
85% of the regulatory asset base relating to the year in which the relevant distribution or grant is first declared or
made.
Other
Events of default include cross-default of Issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 2% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose profits on
ordinary activities before tax or net assets represent 20% or more of the consolidated profits on ordinary activities
before tax or consolidated net assets, as calculated in the latest audited financial statements.
Source: Company data, HSBC

488

European Credit Research


Corporate Bond Covenants
September 2010

abc

Gas

489

abc

European Credit Research


Corporate Bond Covenants
September 2010

Bord Gais Eireann


Bond
Coupon

Maturity

Issuer

16 Jun 2014 Bord Gais Eireann


5.75%
Step Up
(see Other)

Guarantor

Out amt

Type

None

EUR550m

EMTN sr unsecured

Call
Callable ref German government bonds 2.25% due April 2014 (OBL 154) and for taxation reasons.
Negative pledge
Covers relevant debt of the issuer and principal subsidiaries and excludes limited-recourse indebtedness and
permitted securitisations. Relevant debt is defined as any present or future indebtedness in the form of, or
represented by notes, bonds, debentures, loan stock, or other securities. Principal subsidiary is defined as a
subsidiary of BGE whose net profits or net assets represent at least 10% of consolidated net profits or consolidated
net assets in the latest audited accounts.
Put
Put at par with accrued interest in case of: (i) a change of control followed by a rating downgrade (Moodys AND S&P
downgrade to non IG) within the CoC period (starts with potential CoC announcement and ends 90 days after the
CoC date or such period for which the bonds are under review by a rating agency provided that the review
announcement has been made within 90 days of the CoC; in this case the CoC period is not to exceed 60 days
following the review announcement); or (ii) a regulatory event occurs (enactment of law or regulation in Ireland
making it unlawful for BGE to own regulated assets), a rating downgrade occurs within the regulatory event period
(end 60 days from the regulatory event date ) and an independent financial advisor certifies to BGE and the trustee
that the event is materially prejudicial to the interest of bondholders; or (iii) a permitted restructuring event credit
event occurs or a permitted restructuring event risk occurs. These two events would happen should the asset and
liabilities of BGE be transferred to an entity that would not become the principal debtor under the notes or not
guarantee the notes as a result of an ownership unbundling or an ISO/TSO unbundling event.
Covenants
None
Other
Events of default include cross-default on issuer and principal subsidiaries on indebtedness in excess of EUR20m.
Principal subsidiary is defined as a subsidiary of BGE whose net profits or net assets represent at least 10% of
consolidated net profits or consolidated net assets in the latest audited accounts. Where a permitted restructuring
event credit event or a permitted restructuring event risk occurs and the ratings are downgraded by one notch or
more, the coupon steps up by 25bp per notch downgrade per agency (Moodys and S&P) below A3/A- to and
including BBB-/Baa3.
Source: Company data, HSBC

490

abc

European Credit Research


Corporate Bond Covenants
September 2010

Centrica
Bond
Coupon

Maturity

Issuer

5.875%

02 Nov 2012 Centrica Plc

Guarantor

Out amt

Type

None

GBP400m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge includes public debt with maturity of more than one year, issued by the issuer and any principal
subsidiary. A principal subsidiary is defined as a subsidiary representing not less than 20% of consolidated total
assets and consolidated turnover, as calculated by reference to the latest audited consolidated accounts.
Put
None
Covenants
None
Other
Events of default include cross default of issuer or any principal subsidiary for obligations exceeding GBP40m. A
principal subsidiary is defined as a subsidiary representing not less than 20% of consolidated total assets and
consolidated turnover, as calculated by reference to the latest audited consolidated accounts.
Source: Company data, HSBC

491

abc

European Credit Research


Corporate Bond Covenants
September 2010

Centrica
Bond
Coupon

Maturity

Issuer

5.5%

24 Oct 2016 Centrica Plc

Guarantor

Out amt

Type

None

GBP300m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge includes public debt with maturity of more than one year, issued by the issuer and any principal
subsidiary. A principal subsidiary is defined as a subsidiary representing not less than 20% of consolidated total
assets and consolidated turnover, as calculated by reference to the latest audited consolidated accounts.
Put
Put at par plus accrued interest if there is a change of control resulting in a downgrade of the notes to noninvestment grade within the change of control period by either of Moodys or S&P (one notch if the notes are already
non-investment grade). A change of control is defined as a person or a group of persons acquiring or owning directly
or indirectly more than 50% of Centricas shares or voting rights. The change of control period starts on the day a
potential change of control announcement is made and ends 90 days after the actual change of control. This can be
extended by up to 60 days if the notes are still under consideration (review or CreditWatch) at the end of the change
of control period.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary for obligations exceeding GBP40m. A
principal subsidiary is defined as a subsidiary representing not less than 20% of consolidated total assets and
consolidated turnover, as calculated by reference to the latest audited consolidated accounts.
Source: Company data, HSBC

492

abc

European Credit Research


Corporate Bond Covenants
September 2010

Centrica
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

09 Dec 2013 Centrica plc


7.125%
Step up
(see Other)

None

EUR750m

EMTN sr unsecured

5.125%
10 Dec 2014 Centrica plc
Step up
(see Other)

None

GBP350m

EMTN sr unsecured

Call
Tax call
Negative pledge
Covers relevant indebtedness of the issuer and any of its principal subsidiaries. Relevant indebtedness is defined as
any notes, bonds or other debt securities having an original maturity of more than one year which are, for the time
being, listed or traded on a stock exchange or other recognised securities market.
Put
Put at par in the occurrence of a put event. A put event occurs when there is a change of control followed by a rating
downgrade or negative rating event by Moodys or S&P within the change of control period (defined as from the
relevant announcement date and ending 90 days after the change of control date). The relevant announcement date
is defined as any public announcement by the issuer, any bidder or adviser relating to any potential change of
control, provided a change of control occurs within 180 days of such an announcement. A change of control is
defined as the acquisition (indirectly or directly) of more than 50% of the issued/allotted ordinary share capital or the
total voting rights of the issuer. A rating downgrade is defined as a downgrade to non-investment grade, or, if already
below investment grade, a further downgrade of one or more notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary for indebtedness exceeding GBP40m. A
principal subsidiary is defined as any subsidiary of the issuer whose total assets or external turnover constitute more
than 20% of the consolidated total assets or turnover of the issuer. A step-up coupon event occurs when any
member of the issuers group acquires, directly or indirectly, 10% or more of the equity share capital or gross assets
of British Energy Group plc. Only in this case does the coupon step up as follows: Coupon steps up by 25bp if rating
is downgraded to BBB+/Baa1, 50bp if downgraded to BBB/Baa2 or 75bp if downgraded to BBB-/Baa3 or worse or if
no rating is assigned. It steps down to the initial interest rate if upgraded back to A-/A3 or better.
Source: Company data, HSBC

493

abc

European Credit Research


Corporate Bond Covenants
September 2010

Centrica
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

19 Sep 2018 Centrica plc


7%
Step Up
(see Other)

None

GBP400m

EMTN sr unsecured

6.375%
10 Mar 2022 Centrica plc
Step Up
(see Other)

None

GBP500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Covers relevant indebtedness of the issuer and any of its principal subsidiaries. Relevant indebtedness is defined as
any notes, bonds or other debt securities having an original maturity of more than one year which are, for the time
being, listed or traded on a stock exchange or other recognised securities market.
Put
Put at par in the occurrence of a put event. A put event occurs when there is a change of control followed by a rating
downgrade or negative rating event by Moodys or S&P within the change of control period (defined as from the
relevant announcement date and ending 90 days after the change of control date). The relevant announcement date
is defined as any public announcement by the issuer, any bidder or adviser relating to any potential change of
control, provided a change of control occurs within 180 days of such an announcement. A change of control is
defined as the acquisition (indirectly or directly) of more than 50% of the issued/allotted ordinary share capital or the
total voting rights of the issuer. A rating downgrade is defined as a downgrade to non-investment grade, or, if already
below investment grade, a further downgrade of one or more notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary for indebtedness exceeding GBP40m. A
principal subsidiary is defined as any subsidiary of the issuer whose total assets or external turnover constitute more
than 20% of the consolidated total assets or turnover of the issuer. A step-up coupon event occurs when any
member of the issuers group acquires, directly or indirectly, 10% or more of the equity share capital or gross assets
of British Energy Group plc. Only in this case does the coupon step up as follows: Coupon steps up by 25bp if rating
is downgraded to BBB+/Baa1, 50bp if downgraded to BBB/Baa2 or 75bp if downgraded to BBB-/Baa3 or worse, or if
no rating is assigned. It steps down to the initial interest rate if upgraded back to A-/A3 or better.
Source: Company data, HSBC

494

abc

European Credit Research


Corporate Bond Covenants
September 2010

Centrica
Bond
Coupon

Maturity

Issuer

19 Sep 2033 Centrica plc


7%
Step Up
(see Other)

Guarantor

Out amt

Type

None

GBP770m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Covers relevant indebtedness of the issuer and any of its principal subsidiaries. Relevant indebtedness is defined as
any notes, bonds or other debt securities having an original maturity of more than one year which are, for the time
being, listed or traded on a stock exchange or other recognised securities market.
Put
Put at par in the occurrence of a put event. A put event occurs when there is a change of control followed by a
Rating downgrade or negative rating event by Moodys or S&P within the change of control period (defined as from
the relevant announcement date and ending 90 days after the change of control date). The relevant announcement
date is defined as any public announcement by the issuer, any bidder or adviser relating to any potential change of
control provided a change of control occurs within 180 days of such an announcement. A change of control is
defined as the acquisition (indirectly or directly) of more than 50% of the issued/allotted ordinary share capital or the
total voting rights of the issuer. A rating downgrade is defined as a downgrade to non-investment grade, or, if already
below investment grade, a further downgrade of one or more notches, or a withdrawal of the rating.
Covenants
None
Other
Events of default include cross-default of issuer or any principal subsidiary for indebtedness exceeding GBP40m. A
principal subsidiary is defined as any subsidiary of the issuer whose total assets or external turnover constitute more
than 20% of the consolidated total assets or turnover of the issuer. A step-up coupon event occurs when any
member of the issuers group acquires, directly or indirectly, 10% or more of the equity share capital or gross assets
of British Energy Group plc. Only in this case does the coupon step up as follows: Coupon steps up by 25bp if rating
is downgraded to BBB+/Baa1, 50bp if downgraded to BBB/Baa2 or 75bp if downgraded to BBB-/Baa3 or worse or if
no rating is assigned. It steps down to the initial interest rate if upgraded back to A-/A3 or better.
Source: Company data, HSBC

495

abc

European Credit Research


Corporate Bond Covenants
September 2010

Enagas
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

3.25%

06 Jul 2012

Enagas SA

None

EUR500m

Senior unsecured

4.375%

06 Jul 2015

Enagas SA

None

EUR500m

Senior unsecured

Call
None
Negative pledge
Negative pledge covers the relevant indebtedness of the issuer. The definition excludes permitted encumbrances
(including secured debt existing on 22 June 2009). Relevant indebtedness includes bonds, notes and instruments
listed or capable of being listed on an exchange or exchanged over the counter.
Put
None
Covenants
None
Other
Events of default covers default by the issuer subject to a EUR25m carve-out.
Source: Company data, HSBC

496

abc

European Credit Research


Corporate Bond Covenants
September 2010

Gas Natural
Bond
Coupon

Maturity

3.125%
5.25%

Issuer

Guarantor

Out amt

Type

02 Nov 2012 Gas Natural Capital


Markets SA

Gas Natural SDG SA

EUR500m

EMTN sr unsecured

09 Jul 2014

Gas Natural SDG, S.A. EUR2000m

Gas Natural Capital


Markets SA

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, guarantor and subsidiaries, which includes bonds,
notes, debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt
with on any stock exchange. It notably excludes relevant indebtedness not exceeding EUR50m (in relation to the
guarantor and its subsidiaries) and project finance debt.
Put
Put at par following a change of control that is followed by a rating downgrade by Moodys, S&P or Fitch. The change
of control period beginning on the earlier of: i) the date of the relevant CoC; or ii) the date of first relevant potential
CoC announcement and ending 90 days after the occurrence of the change of control. A change of control is the
acquisition or control, indirectly or directly, of >50% of the voting shares of the guarantor or the right to
appoint/remove all or the majority of the members of the guarantors board of directors or other governing body. A
rating downgrade is defined as a downgrade of the guarantors credit rating by at least two full notches or withdrawal
by the requisite number of rating agencies. No CoC will be deemed to have occurred if the credit rating is still
investment grade or if the rating agencies lowering or withdrawing the rating do not publicly announce or otherwise
confirm in writing to the issuer that such reduction or withdrawal was the result of the applicable change of control.
The requisite number of rating agencies shall mean: i) at least two rating agencies if, at the time of rating
downgrade/withdrawal, three or more rating agencies have assigned a credit rating to the guarantor; or ii) at least
one rating agency if fewer than three rating agencies have assigned a credit rating to the guarantor.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor and their respective principal subsidiaries on obligations
exceeding EUR50m. Principal subsidiaries are subsidiaries of the guarantor which represent at least 10% of the total
assets, income before taxes or sales of the Gas Natural Group on a consolidated basis as referenced to the latest
annual audited financial statements of the Gas Natural Group.
Source: Company data, HSBC

497

abc

European Credit Research


Corporate Bond Covenants
September 2010

Gas Natural
Bond
Coupon

Maturity

3.375%
4.375%

Issuer

Guarantor

Out amt

Type

27 Jan 2015 Gas Natural Capital


Markets SA

Gas Natural SDG SA

EUR650m

EMTN sr unsecured

02 Nov 2016 Gas Natural Capital


Markets SA

Gas Natural SDG SA

EUR1000m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, guarantor and subsidiaries, which includes bonds,
notes, debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt
with on any stock exchange. It notably excludes relevant indebtedness not exceeding EUR50m (in relation to the
guarantor and its subsidiaries) and project finance debt.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch. The change
of control period beginning on the earlier of: i) the date of the relevant CoC; or ii) the date of first relevant potential
CoC announcement and ending 90 days after the occurrence of the change of control. A change of control is the
acquisition or control, indirectly or directly, of >50% of the voting shares of the guarantor or the right to
appoint/remove all or the majority of the members of the guarantors board of directors or other governing body. A
rating downgrade is defined as a downgrade of the guarantors credit rating by at least two full notches or withdrawal
by the requisite number of rating agencies. No CoC will be deemed to have occurred if the credit rating is still
investment grade or if the rating agencies lowering or withdrawing the rating do not publicly announce or otherwise
confirm in writing to the issuer that such reduction or withdrawal was the result of the applicable change of control.
The requisite number of rating agencies shall mean: i) at least two rating agencies if, at the time of rating
downgrade/withdrawal, three or more rating agencies have assigned a credit rating to the guarantor; or ii) at least
one rating agency if fewer than three rating agencies have assigned a credit rating to the guarantor.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor and their respective principal subsidiaries on obligations
exceeding EUR50m. Principal subsidiaries are subsidiaries of the guarantor which represent at least 10% of the total
assets, income before taxes or sales of the Gas Natural Group on a consolidated basis as referenced to the latest
annual audited financial statements of the Gas Natural Group.
Source: Company data, HSBC

498

abc

European Credit Research


Corporate Bond Covenants
September 2010

Gas Natural
Bond
Coupon

Maturity

4.125%
6.375%

Issuer

Guarantor

Out amt

Type

26 Jan 2018 Gas Natural Capital


Markets SA

Gas Natural SDG SA

EUR700m

EMTN sr unsecured

09 Jul 2019

Gas Natural SDG SA

EUR500m

EMTN sr unsecured

Gas Natural Capital


Markets SA

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, guarantor and subsidiaries, which includes bonds,
notes, debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt
with on any stock exchange. It notably excludes relevant indebtedness not exceeding EUR50m (in relation to the
guarantor and its subsidiaries) and project finance debt.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch. The change
of control period beginning on the earlier of: i) the date of the relevant CoC; or ii) the date of first relevant potential
CoC announcement and ending 90 days after the occurrence of the change of control. A change of control is the
acquisition or control, indirectly or directly, of >50% of the voting shares of the guarantor or the right to
appoint/remove all or the majority of the members of the guarantors board of directors or other governing body. A
rating downgrade is defined as a downgrade of the guarantors credit rating by at least two full notches or withdrawal
by the requisite number of rating agencies. No CoC will be deemed to have occurred if the credit rating is still
investment grade or if the rating agencies lowering or withdrawing the rating do not publicly announce or otherwise
confirm in writing to the issuer that such reduction or withdrawal was the result of the applicable change of control.
The requisite number of rating agencies shall mean: i) at least two rating agencies if, at the time of rating
downgrade/withdrawal, three or more rating agencies have assigned a credit rating to the guarantor; or ii) at least
one rating agency if fewer than three rating agencies have assigned a credit rating to the guarantor.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor and their respective principal subsidiaries on obligations
exceeding EUR50m. Principal subsidiaries are subsidiaries of the guarantor which represent at least 10% of the total
assets, income before taxes or sales of the Gas Natural Group on a consolidated basis as referenced to the latest
annual audited financial statements of the Gas Natural Group.
Source: Company data, HSBC

499

abc

European Credit Research


Corporate Bond Covenants
September 2010

Gas Natural
Bond
Coupon

Maturity

4.5%
5.125%

Issuer

Guarantor

Out amt

Type

27 Jan 2020 Gas Natural Capital


Markets SA

Gas Natural SDG SA

EUR850m

EMTN sr unsecured

02 Nov 2021 Gas Natural Capital


Markets SA

Gas Natural SDG SA

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, guarantor and subsidiaries, which includes bonds,
notes, debentures, loan stock or other securities, which are, or are capable of being, quoted, listed, or ordinarily dealt
with on any stock exchange. It notably excludes relevant indebtedness not exceeding EUR50m (in relation to the
Guarantor and its subsidiaries) and project finance debt.
Put
Put at par following a change of control and followed by a rating downgrade by Moodys, S&P or Fitch. The change
of control period beginning on the earlier of: i) the date of the relevant CoC; or ii) the date of first relevant potential
CoC announcement and ending 90 days after the occurrence of the change of control. A change of control is the
acquisition or control, indirectly or directly, of >50% of the voting shares of the guarantor or the right to
appoint/remove all or the majority of the members of the guarantors board of directors or other governing body. A
rating downgrade is defined as a downgrade of the guarantors credit rating by at least two full notches or withdrawal
by the requisite number of rating agencies. No CoC will be deemed to have occurred if the credit rating is still
investment grade or if the rating agencies lowering or withdrawing the rating do not publicly announce or otherwise
confirm in writing to the issuer that such reduction or withdrawal was the result of the applicable change of control.
The requisite number of rating agencies shall mean: i) at least two rating agencies if, at the time of rating
downgrade/withdrawal, three or more rating agencies have assigned a credit rating to the guarantor; or ii) at least
one rating agency if fewer than three rating agencies have assigned a credit rating to the guarantor.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor and their respective principal subsidiaries on obligations
exceeding EUR50m. Principal subsidiaries are subsidiaries of the guarantor which represent at least 10% of the total
assets, income before taxes or sales of the Gas Natural Group on a consolidated basis as referenced to the latest
annual audited financial statements of the Gas Natural Group.
Source: Company data, HSBC

500

abc

European Credit Research


Corporate Bond Covenants
September 2010

GDF Suez
Bond
Coupon

Maturity

FRN

Issuer

Guarantor

Out amt

Type

03 May 2011 Belgelec Finance SA GIE Suez Alliance

EUR400m

Senior unsecured

5.5%

26 Nov 2012 GIE Suez Alliance

None

EUR300m

EMTN sr unsecured

5.125%

24 Jun 2015 Belgelec Finance SA None

EUR750m

Senior unsecured
B notes

5.75%

24 Jun 2023 GIE Suez Alliance

EUR1000m

Senior unsecured
C notes

None

Call
Tax call.
Negative pledge
Negative pledge covers the issuer, GIE Suez Alliance or the Members in respect of bonds, notes or debt securities
which are or capable of being quoted, listed or ordinarily dealt with on any stock exchange. This excludes
indebtedness used in: i) the purchase of an asset and such security is provided over or in respect of such asset; or ii)
the refinancing of any indebtedness incurred for the purpose of (i), provided that the security is provided over or in
respect of the same asset.
Put
None
Covenants
None
Other
Events of default include cross-default of indebtedness exceeding EUR10m in the case of the issuer and EUR50m in
the case of the guarantor or any of its members.
Source: Company data, HSBC

501

abc

European Credit Research


Corporate Bond Covenants
September 2010

GDF Suez
Bond
Coupon

Maturity

4.375%

Issuer

Guarantor

Out amt

Type

16 Jan 2012 GDF Suez SA

None

EUR1750m

EMTN sr unsecured

6.25%

24 Jan 2014 GDF Suez SA

None

EUR1400m

EMTN sr unsecured

5%

23 Feb 2015 GDF Suez SA

None

EUR750m

EMTN sr unsecured

5.625%

18 Jan 2016 GDF Suez SA

None

EUR1500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers bonds, notes or debt securities, which are or capable of being, quoted, listed, or ordinarily
dealt with on any stock exchange, without granting the same ranking security to the notes. This is excluding
securities with an initial maturity of less than a year.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on obligations exceeding EUR100m.
Source: Company data, HSBC

502

abc

European Credit Research


Corporate Bond Covenants
September 2010

GDF Suez
Bond
Coupon

Maturity

6.875%

Issuer

Guarantor

Out amt

Type

24 Jan 2019 GDF Suez SA

None

EUR1200m

EMTN sr unsecured

6.375%

18 Jan 2021 GDF Suez SA

None

EUR1000m

EMTN sr unsecured

6.125%

11 Feb 2021 GDF Suez SA

None

GBP700m

EMTN sr unsecured

7%

30 Oct 2028 GDF Suez SA

None

GBP500m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers bonds, notes or debt securities, which are or capable of being, quoted, listed, or ordinarily
dealt with on any stock exchange, without granting the same ranking security to the notes. This is excluding
securities with an initial maturity of less than a year.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer on obligations exceeding EUR100m.
Source: Company data, HSBC

503

abc

European Credit Research


Corporate Bond Covenants
September 2010

GDF Suez
Bond
Coupon

Maturity

4.75%
5.125%

Issuer

Guarantor

Out amt

Type

19 Feb 2013 GDF Suez SA

None

EUR1250m

EMTN sr unsecured

19 Feb 2018 GDF Suez SA

None

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers indebtedness issued by the issuer or its principal subsidiaries. Indebtedness means
borrowed money in the form of bonds, notes, debentures, which are or are capable of being quoted, listed or traded
on any stock exchange, or over the counter or other securities market. The negative pledge does not cover loan or
credit facility agreements. For the purpose of that definition, a principal subsidiary is more than 50% owned or
controlled by the issuer and accounts for more than 10% of annual consolidated turnover or consolidated operating
income before tax based on the latest annual audited consolidated financial statements.
Put
None
Covenants
None
Other
Events of default covers the issuer and principal subsidiaries subject to a carve-out of EUR75m. The cross-default
includes public debt loan agreements and credit facility arrangements. A principal subsidiary is more than 50%
owned or controlled by the issuer and accounts for more than 10% of annual consolidated turnover or consolidated
operating income before tax, based on the latest annual audited consolidated financial statements
Source: Company data, HSBC

504

abc

European Credit Research


Corporate Bond Covenants
September 2010

GDF Suez
Bond
Coupon

Maturity

Issuer

4.75%

10 Apr 2015 Electrabel

Guarantor

Out amt

Type

GIE Suez Alliance

EUR600m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers the issuer, GIE Suez Alliance or the members in respect of bonds, notes or debt securities
which are or capable of being quoted, listed or ordinarily dealt with on any stock exchange. This excludes
indebtedness of Electrabel, GIE Suez Alliance, Suez Environnement, Ondeo, Sita France, Suez Energie Services,
Lyonnaise des Eaux France, Tractebel or any future members of GIE Suez Alliance that is used in: i) the purchase of
an asset and such security is provided over or in respect of such asset; or ii) the refinancing of any indebtedness
incurred for the purpose of (i), provided that the security is provided over or in respect of the same asset.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer and guarantor on obligations exceeding EUR100m.
Source: Company data, HSBC

505

abc

European Credit Research


Corporate Bond Covenants
September 2010

Nederlandse Gasunie
Bond
Coupon

Maturity

6%
5.125%

Issuer

Guarantor

Out amt

Type

30 Oct 2013 N.V. Nederlandse


Gasunie

None

EUR1400m

EMTN sr unsecured

31 Mar 2017 N.V. Nederlandse


Gasunie

None

EUR750m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers public debt. Public debt is defined as any bond, note, debenture, or similar instrument that is, or is
capable of being, listed, quoted or traded on any stock exchange or in any securities market and OTC market.
Put
None
Covenants
None
Other
No cross-default provision.
Source: Company data, HSBC

506

abc

European Credit Research


Corporate Bond Covenants
September 2010

Northern Gas Networks Ltd


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.625%

23 Mar 2040 Northern Gas


Northern Gas Networks GBP200m
Networks Finance plc Ltd

Type
Senior unsecured

Call
Tax call; issuer call in whole or in part of at least GBP5m, at the higher of par or the price at which the gross
redemption yield on the bonds would be equal to the one of the UKT4.75 2038 (or if such stock is no longer
available, of the other UKT as the issuer shall determine to be appropriate).
Negative pledge
Negative pledge covers debt of the issuer and NGN unless the bonds are secured equally. It does not apply to any
security interest if, when aggregated with all other indebtedness, it does not exceed 10% of the RAV of NGN as at
the date of the incurrence of the security.
Put
A regulatory put event shall be deemed to have occurred if there is an NGN restructuring event and followed (during the
restructuring period of 60 days starting from and including the date the restructuring event occurs) by either a ratings
downgrade (from investment grade to sub-investment grade or by one notch if already rated sub-investment grade or a
negative rating event happening simultaneously with an independent financial adviser giving a negative certification. A
restructuring event is defined as: 1) the revocation of NGNs licence; 2) any material rights, benefits or obligations under
its licence are revoked; or 3) any legislation reducing the power of the Secretary of State for the Department of Trade and
Industry (or any successor).
Covenants
None
Other
Events of default cover debt of the issuer and NGN with an amount of no less than GBP25m (or its equivalent in
other currencies).
Source: Company data, HSBC

507

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wales & West Utilities


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.125%

02 Dec 2016 Wales & West Utilities Wales and West Utilities GBP200m
Finance plc
Ltd and MGN Gas
Networks Ltd

Senior unsecured

6.25%

30 Nov 2021 Wales & West Utilities WWU and MGN Senior GBP250m
Ltd
Finance

Senior unsecured

Call
Tax call
Negative pledge
The class A wrapped bonds and the Class A unwrapped bonds rank pari passu among each other in terms of
interest and principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as: the senior RAR is less than 90%, the CLASS A
RAR is less than 75%, the senior adjusted ICR is equal to or more than 1.1x, the class A adjusted ICR is equal to or
more than 1.3x, the senior average adjusted ICR is equal to or more than 1.2x, and the class A average adjusted
ICR is equal to or more than 1.4x.
Other
Events of default also include: the CLASS A ICR is less than 1.6x, the senior RAR is more than 95% and the class A
adjusted ICR is less than 1x; a WWU change of control.
Source: Company data, HSBC

508

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wales & West Utilities


Bond
Coupon

Maturity

5.75%

Issuer

Guarantor

Out amt

Type

29 Mar 2030 Wales & West Utilities Wales & West Utilities
Finance plc
Ltd

GBP300m

Senior sub-class A2
issued under the
GBP5bn guaranteed
bond programme

FRN

22 Aug 2035 Wales & West Utilities Wales & West Utilities
Finance plc
Ltd

GBP100m

Senior sub-class A1
index-linked bonds
issued under the
GBP5bn guarantee
bond programme

FRN

17 Dec 2036 Wales & West Utilities Wales & West Utilities
Finance plc
Ltd

GBP115m

Junior sub-class B1
fixed- to floating-rate
bonds issued under
the GBP5bn
guaranteed bond
programme

Call
2030 bond: Spens call: Ref UKT6 2028; 2035 bond: Spens call: Ref UKTI 1.125 2017; 2036 bond: Spens call: Ref
UKT5 2018. Index call (if index-linked). Tax call.
Negative pledge
The class A wrapped bonds and the class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as: the senior RAR is less than 90%, the class A
RAR is less than 75%, the senior adjusted ICR is equal to or more than 1.1x, the class A adjusted ICR is equal to or
more than 1.3x, the senior average adjusted ICR is equal to or more than 1.2x and the class A average adjusted ICR
is equal to or more than 1.4x.
Other
Events of default also include: the class A ICR is less than 1.6x, the senior RAR is more than 95% and the class A
adjusted ICR is less than 1x; a WWU change of control.
Source: Company data, HSBC

509

European Credit Research


Corporate Bond Covenants
September 2010

510

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Water

511

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

4.625%

07 Oct 2013 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing EUR650m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Tax call, Indexation call (if index linked).
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (Interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment (AWS
licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six months; (iv) a
change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

512

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

5.25%

30 Oct 2015 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing GBP250m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Tax call, Indexation call (if index linked)
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (Post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment (AWS
licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six months; (iv) a
change of control of AWS, (v) a drop in the class A unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

513

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.25%

27 Jun 2016 Anglian Water


Ring-fenced financing EUR500m
Services Financing plc group: Anglican Water
Services Ltd, Anglican
Water Services Holdings
Ltd, Anglican Water
Services Overseas
Holdings, Ltd.

Type
Class A unwrapped
under EUR10bn global
EMTN programme

Call
Tax call, indexation call (if index linked)/
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment (AWS
licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six months; (iv) a
change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

514

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

30 Jul 2022

Anglian Water
Services Financing
Plc

Ring-fenced financing GBP250m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A wrapped
(MBIA insured)

Call
Tax call, Indexation call (if index linked).
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (Net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment (AWS
licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six months; (iv) a
change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

515

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

FRN

01 Aug 2045 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing GBP130m


group: Anglican Water
Services Ltd, Anglican
Water Services Holdings
Ltd, Anglican Water
Services Overseas
Holdings, Ltd.

Type
Guaranteed class A
senior unwrapped
under the EUR10bn
global secured MTN
programme

Call
Tax call, indexation call (if index linked).
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, Senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment (AWS
licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six months; (iv) a
change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

516

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

6.875%

21 Aug 2023 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing GBP200m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Spens call reference RPI UKT2% 2035.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, Senior PMICR<1.1x, Class A RAR>75% or Senior RAR>95%. Other trigger events for Class
A unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to
Baa2/BBB/BBB and conditions related to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash
distributions to the parent and can be remedied in various ways (remedial plan, independent review, consultation
with Ofwat, appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

517

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

6.625%

15 Jan 2029 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing GBP200m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Spens call reference UKT4.125% RPI linked 2030.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

518

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

30 Jul 2030

Anglian Water
Services Financing
Plc

Ring-fenced financing GBP246m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Spens call reference UKT 6% 2028.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

519

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

30 Jul 2032

Anglian Water
Services Financing
Plc

Ring-fenced financing GBP200m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A wrapped
(MBIA insured)

Call
Spens call reference UKT 6% 2028.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

520

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

2.4%

20 Apr 2035 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing GBP402m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Spens call reference UKT 8% 2021.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the Senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

521

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

5.5%

10 Oct 2040 Anglian Water


Services Financing
Plc

Guarantor

Out amt

Ring-fenced financing GBP150m


group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class B unwrapped

Call
Spens call reference UKT 8% 07/06/2021.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (Interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, Senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

522

abc

European Credit Research


Corporate Bond Covenants
September 2010

Anglian Water Services


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

19 Jul 2057

Anglian Water
Ring-fenced financing GBP100m
Services Financing plc group: Anglian Water
Services Ltd, Anglian
Water Services Holdings
Ltd, Anglian Water
Services Overseas
Holdings Ltd

Type
Class A unwrapped

Call
Spens call reference UKT4.75% 2015.
Negative pledge
Class A unwrapped bonds and class A wrapped bonds rank pari passu among each other and rank in priority to the
class B wrapped bonds and the class B unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A ICR (interest cover ratio) and the
class A PMICR (post maintenance interest cover ratio) are above 1.3x and the class A RAR (regulated asset ratio for
class A) and the senior RAR (regulated asset ratio) are below 75% and 90%, respectively. It is an event of default if
the class A ICR drops below 1.6x or if the senior RAR rises above 95% or (net cash flow - capex)/class A debt
interest ratio<1x. The following are trigger events: class A average PMICR<1.4x, class A PMICR<1.3x, senior
average PMICR<1.2x, senior PMICR<1.1x, class A RAR>75% or senior RAR>95%. Other trigger events for class A
unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to Baa2/BBB/BBB
and conditions related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service
reserve liquidity facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include: (i) class A ICR falling below 1.6x or senior RAR rising above 95% or (net cash flow capex)/class A debt interest ratio <1x; (ii) the transfer, termination or revocation of the instrument of appointment
(AWS licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of AWS; (v) a drop in the class A unwrapped ratings below investment grade by two
rating agencies.
Source: Company data, HSBC

523

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dwr Cymru
Bond
Coupon

Maturity

FRN

Issuer

Guarantor

Out amt

Type

31 Mar 2021 Dwr Cymru Financing None


Ltd

GBP325m

Class B1 assetbacked

6.015%

31 Mar 2028 Dwr Cymru Financing MBIA Assurance SA


Ltd

GBP350m

Class A1 assetbacked

FRN

31 Mar 2030 Dwr Cymru Financing MBIA Assurance SA


Ltd

GBP265m

Class A4 assetbacked

Call
2021 bond: Spens call reference UKT 8% 2021; 2028 bond: Spens call reference UKT 6% 2028; 2030 bond:
Spens call reference UKT 4.125% 2030 (index-linked); 2048 bond: Spens call ref UKTI0.75% 2047. Also callable
for taxation or indexation (if index linked) reasons.
Negative pledge
Class A bonds, class B bonds and class R bonds rank pari passu among themselves and rank in priority to the Class
C bonds and class D bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the ICR (interest cover ratio) is above 1.6x and
the RAR (regulated asset ratio) is below 95%. It is an event of default if the ICR drops below 1.6x and the adjusted
ICR (adjusted to deduct actual or planned capital maintenance expenditure) below 1.0x, or if the RAR rises above
95%. The following are trigger events: ICR<2.0x, RAR>90%, adjusted ICR <1.0x. Other trigger events include a
rating downgrade by any two rating agencies out of three to Baa2/BBB/BBB, termination of licence, and conditions
related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service reserve liquidity
facilities and O&M reserve facility). A trigger event results in locking up cash distributions to the parent and can be
remedied in various ways (remedial plan, independent review, consultation with Ofwat, appointment of additional
non-executive directors). A trigger event is not an event of default.
Other
Events of default include breach of any covenants, including financial covenants, eg if the ICR drops below 1.6x and
adjusted ICR below 1.0x or if the RAR rises above 95%. Other events of default include the change of control of any
obligor, and termination of DWRs appointment under the Water Industry Act 1991. Dwr Cymru Cyfyndedig, DWR
Cymru Holdings Limited, Glas Cymru Securities Cyfyndedig and Glas Cymru Cyfyndedig are each an obligor.
Source: Company data, HSBC

524

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dwr Cymru
Bond
Coupon

Maturity

FRN

FRN

Issuer

Guarantor

Out amt

Type

31 Mar 2048 Dwr Cymru Financing None


Ltd

GBP140m

Class B bonds issued


under the multi-currency
programme for the
issuance of up to
GBP3bn of assetbacked bonds and up to
GBP3bn of guaranteed
asset-backed bonds

31 Mar 2057 Dwr Cymru Financing Dwr Cymru financing


Ltd
group

GBP100m

Class A1 asset-backed

Call
2021 bond: Spens call reference UKT 8% 2021; 2028 bond: Spens call reference UKT 6% 2028; 2030 bond:
Spens call reference UKT 4.125% 2030 (index-linked); 2048 bond: Spens call ref UKTI0.75% 2047. Also callable
for taxation or indexation (if index linked) reasons.
Negative pledge
Class A bonds, class B bonds and class R bonds rank pari passu among themselves and rank in priority to the class
C bonds and class D bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the ICR (interest cover ratio) is above 1.6x and
the RAR (regulated asset ratio) is below 95%. It is an event of default if the ICR drops below 1.6x and adjusted ICR
(adjusted to deduct actual or planned capital maintenance expenditure) below 1.0x or if the RAR rises above 95%.
The following are trigger events: ICR<2.0x, RAR>90%, adjusted ICR <1.0x. Other trigger events include a rating
downgrade by any two rating agencies out of three to Baa2/BBB/BBB, termination of licence, and conditions related
to liquidity reserves (debt service payment, capex and working capital liquidity, debt service reserve liquidity facilities
and O&M reserve facility). A trigger event results in locking up cash distributions to the parent and can be remedied
in various ways (remedial plan, independent review, consultation with Ofwat, appointment of additional nonexecutive directors). A trigger event is not an event of default.
Other
Events of default include breach of any covenants, including financial covenants, eg if the ICR drops below 1.6x and
adjusted ICR below 1.0x or if the RAR rises above 95%. Other events of default include the change of control of any
obligor, and termination of DWRs appointment under the Water Industry Act 1991. Dwr Cymru Cyfyndedig, DWR
Cymru Holdings Limited, Glas Cymru Securities Cyfyndedig and Glas Cymru Cyfyndedig are each an obligor.
Source: Company data, HSBC

525

abc

European Credit Research


Corporate Bond Covenants
September 2010

Northumbrian Water
Bond
Coupon

Maturity

6%

Issuer

Out amt

Type

11 Oct 2017 Northumbrian Water Northumbrian Water


Finance Plc
Limited

GBP300m

Senior unsecured

5.625%

29 Apr 2033 Northumbrian Water Northumbrian Water


Finance Plc
Limited

GBP350m

Senior unsecured

FRN

15 Jul 2036

GBP150m

Senior unsecured

Northumbrian Water
Finance Plc

Guarantor

Northumbrian Water
Limited

Call
Spens call reference UKT 8% 2015 (for 2017 bonds); UKT 4.25% 2032 (for 2033 bonds); UKT 2% 2035 (for 2036
bonds). Also callable for taxation reasons.
Negative pledge
Standard UK negative pledge. Sterling debt with initial maturity of at least 20 years is excluded.
Put
Bondholder put at par on put event, which is: 1) termination of Northumbrian Waters appointment; or 2) restructuring
event, within 45 days of which there is a rating downgrade (defined as withdrawal or downgrade to below
INVESTMENT grade or, if already rated below investment grade, a further downgrade of one full rating category); or
3) Material subsidiary (Northumbrian Water or subsidiary with 20% or more of group net assets or pre-tax profits as
shown in the latest audited consolidated statements) ceases to be wholly owned by issuer. A restructuring event is
modification of material rights or obligations of Northumbrian Water as water and sewerage provider or material
modification to its appointment.
Covenants
None
Other
Events of default include cross-default on indebtedness over GBP15m or 2% of the guarantors net tangible assets
of the issuer, guarantor or any principal subsidiaries. These are defined as subsidiaries representing 10% of
consolidated pre-tax profit or net assets as shown in the latest audited consolidated accounts. The definition
excludes project finance.
Source: Company data, HSBC

526

abc

European Credit Research


Corporate Bond Covenants
September 2010

Northumbrian Water
Bond
Coupon

Maturity

Issuer

Guarantor

6.875%

06 Feb 2023 Northumbrian Water Northumbrian Water


Finance Plc
Limited

Out amt

Type

GBP350m

Senior unsecured

Call
Spens call reference UKT 8% 2021 on or after 6/2/01
Negative pledge
Standard UK negative pledge. Sterling debt with initial maturity of at least 20 years is excluded.
Put
Bondholder put at par on put event, which is: 1) termination of Northumbrian Waters appointment or: 2) restructuring
event, within 45 days of which there is a rating downgrade (defined as withdrawal or downgrade to below investment
grade or, if already rated below investment grade, a further downgrade of one full rating category); or 3) material
subsidiary (any subsidiary representing 20% or more of group net assets or profits) ceases to be wholly owned by
issuer (or in the case of Essex and Suffolk Water, 98.865% and 98.073% of A and B ordinary shares, respectively).
A restructuring event is a modification of material rights or obligations of Northumbrian Water as water and sewerage
provider or a material modification to its appointment.
Covenants
None
Other
Events of default include cross-default on indebtedness of the issuer, guarantor or any other subsidiary over the
higher of GBP15m or 2% of the tangible net assets of the issuer.
Source: Company data, HSBC

527

abc

European Credit Research


Corporate Bond Covenants
September 2010

Severn Trent
Bond
Coupon

Maturity

Issuer

5.25%

11 Mar 2016 Severn Trent Water


Utilities Finance plc

Guarantor

Out amt

Type

Severn Trent Water


Limited

EUR700m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and guarantor, which includes bonds, notes, loan stock
or other securities that are quoted, listed, dealt in or traded on a stock exchange or over-the-counter, or other
recognised securities market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer, guarantor, material subsidiaries on obligations exceeding GBP10m.
Material subsidiary is a subsidiary of the STUF notes guarantor whose profits on ordinary activities before tax or net
assets represent 10% or more of the consolidated profits on ordinary activities before tax or consolidated net assets,
as calculated in the latest audited financial statements.
Source: Company data, HSBC

528

abc

European Credit Research


Corporate Bond Covenants
September 2010

Severn Trent
Bond
Coupon

Maturity

5.25%
6%

Issuer

Guarantor

Out amt

Type

08 Dec 2014 Severn Trent Water


Utilities Finance Plc

Severn Trent Water


Limited

GBP200m

EMTN sr unsecured

22 Jan 2018 Severn Trent Water


Utilities Finance plc

Severn Trent Water


Limited

GBP400m

EMTN sr unsecured

Call
(i) Spens call reference UKT 5% 2014 for 2014 bonds only; or (ii) tax call.
Negative pledge
Negative pledge covers relevant indebtedness of issuer and guarantor, which includes bonds, notes, loan stock or
other securities which are quoted, listed, dealt in or traded on a stock exchange or over-the-counter or other
recognised securities market.
Put
Bondholder put at par if: 1) Severn Trent Water Services (guarantor)s appointment under the Water Industry Act is
terminated; OR 2) a restructuring event occurs and is followed, within 45 days (the restructuring period), by a rating
event (if rating is withdrawn or downgraded to below investment grade or, if already below investment grade, rating is
downgraded one full rating category). A restructuring event is defined as a modification of any material terms of
STWSs appointment under the Water Industry Act or if legislation is enacted changing the powers of the Secretary
of State for the Environment or the Director General of Water Services. If not already rated, it must get an investment
grade rating within the 45 days.
Covenants
None
Other
Events of default include cross default of issuer, guarantor or any material subsidiary for obligations exceeding
GBP15m. A material subsidiary is a subsidiary of the guarantor whose profits on ordinary activities before tax or net
assets represent 10% or more of the consolidated profits on ordinary activities before tax or consolidated net assets
as calculated in the latest audited financial statements.
Source: Company data, HSBC

529

abc

European Credit Research


Corporate Bond Covenants
September 2010

Severn Trent
Bond
Coupon

Maturity

Issuer

6.125%

26 Feb 2024 Severn Trent Water


Utilities Finance Plc

Guarantor

Out amt

Type

Severn Trent Water


Limited

GBP300m

Senior unsecured

Call
Spens call reference UKT 8% 2021.
Negative pledge
Negative pledge excludes sterling-based secured debt with a maturity no earlier than 26 February 2024, any bank
debt and project finance indebtedness.
Put
Bondholder put at par if: 1) Severn Trent Water Services (guarantor)s appointment under the Water Industry Act is
terminated; OR 2) a restructuring event occurs and is followed, within 45 days (the restructuring period), by a rating
event (if rating is withdrawn or downgraded to below investment grade or, if already below investment grade, rating is
downgraded one full rating category). A restructuring event is defined as modification of any material terms of
STWSs appointment under the Water Industry Act or if legislation is enacted changing the powers of the Secretary
of State for the Environment or the Director General of Water Services. If not already rated, it must get an investment
grade rating within the 45 days.
Covenants
None
Other
Cross-default on amounts of at least GBP10m owned by the issuer, guarantor, or any material subsidiary. (A
Material subsidiary is one representing at least 10% of pre-tax profits or net assets.) The trustee may agree to a
substitution of the guarantor w/o the consent of bondholders if the trustee is satisfied that the interests of
bondholders would not be materially prejudiced by the substitution and the other conditions of the trust deed are
complied with, including the irrevocable and unconditional guarantee by the issuer.
Source: Company data, HSBC

530

abc

European Credit Research


Corporate Bond Covenants
September 2010

Severn Trent
Bond
Coupon

Maturity

Issuer

6.25%

07 Jun 2029 Severn Trent Water


Utilities Finance Plc

Guarantor

Out amt

Type

Severn Trent Water


Limited

GBP425m

Senior unsecured

Call
Spens call reference UKT 6% 2028
Negative pledge
Negative pledge excludes secured debt with a maturity no earlier than 7 June 2029, any bank debt and project
finance indebtedness.
Put
Bondholder put at par if: 1) Severn Trent Water Services (guarantor)s appointment under the Water Industry Act is
terminated; OR 2) a restructuring event occurs and is followed, within 45 days (the restructuring period) by a rating
event (if rating is withdrawn or downgraded to below investment grade or, if already below investment grade, rating is
downgraded one full rating category). A restructuring event is defined as material modification of any material terms
of STWSs appointment under the Water Industry Act or if legislation is enacted changing the powers of the
Secretary of State for the Environment or the Director General of Water Services. If not already rated, it must get an
investment grade rating within the 45 days.
Covenants
None
Other
Cross-default on amounts of at least GBP10m owned by the issuer, guarantor, or any material subsidiary. (A
material subsidiary is one representing at least 10% of pre-tax profits or net assets.) The trustee may agree to a
substitution of the guarantor w/o the consent of bondholders if the trustee is satisfied that the interests of
bondholders would not be materially prejudiced by the substitution and the other conditions of the trust deed are
complied with, including the irrevocable and unconditional guarantee by the issuer.
Source: Company data, HSBC

531

abc

European Credit Research


Corporate Bond Covenants
September 2010

Severn Trent
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

FRN

11 Aug 2051 Severn Trent Water


Utilities Finance Plc

Severn Trent Water Ltd GBP100m

EMTN sr unsecured

FRN

09 Feb 2057 Severn Trent Water


Utilities Finance Plc

Severn Trent Water Ltd GBP100m

EMTN sr unsecured

Call
Tax call, Indexation call.
Negative pledge
Negative pledge covers relevant indebtedness of issuer and guarantor, which includes bonds, notes, loan stock or
other securities which are quoted, listed, dealt in or traded on a stock exchange or over-the-counter or other
recognised securities market. The definition excludes project finance as well as Severn Trent Water Intl, C2C and
C2C Holdings.
Put
Bondholder put at par if: 1) Severn Trent Water Services (guarantor)s appointment under the Water Industry Act is
terminated; OR 2) a restructuring event occurs and is followed, within 45 days (the restructuring period) by a rating
event (if rating is withdrawn or downgraded to below investment grade or, if already below investment grade, rating is
downgraded one full rating category). A restructuring event is defined as modification of any material terms of
STWSs appointment under the Water Industry Act or if legislation is enacted changing the powers of the Secretary
of State for the Environment or the Director General of Water Services. If not already rated, it must get an investment
grade rating within the 45 days.
Covenants
None
Other
Cross-default on amounts of at least GBP10m owned by the issuer, guarantor, or any material subsidiary. (A
material subsidiary is one representing at least 10% of pre-tax profits or net assets.) The trustee may agree to a
substitution of the guarantor w/o the consent of bondholders if the trustee is satisfied that the interests of
bondholders would not be materially prejudiced by the substitution and the other conditions of the trust deed are
complied with, including the irrevocable and unconditional guarantee by the issuer.
Source: Company data, HSBC

532

abc

European Credit Research


Corporate Bond Covenants
September 2010

South East Water


Bond
Coupon

Maturity

Issuer

FRN

03 Jun 2041 South East Water


(Finance) Ltd

Guarantor

Out amt

Type

South East Water Ltd

GBP130m

Senior guaranteed
unwrapped indexlinked bonds issued
under the GBP750m
guaranteed bond
programme

Call
Tax call. Issuer call at the higher of par or the price determined to be appropriate by a financial adviser in London as
being the price at which the gross real redemption yield on the bonds on the reference date (ie two business days
prior to the despatch of the notice of redemption) is equal to the gross real redemption yield at 3:00pm (London time)
on the reference date on the reference gilt while that stock is in issue.
Negative pledge
The wrapped bonds and the unwrapped bonds rank pari passu among each other in terms of interest and principal
payments.
Put
None
Covenants
None
Other
Events of default include: ICR being less than 1.40:1 and the RAR being more than 0.95:1
Source: Company data, HSBC

533

abc

European Credit Research


Corporate Bond Covenants
September 2010

Southern Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.125%

31 Mar 2019 Southern Water


GBP300m
Southern Water
Services (Finance) Ltd Services Ltd, SWS
Holdings Ltd and SWS
Group Holdings Ltd

Class A unwrapped
bonds

5%

31 Mar 2021 Southern Water


Southern Water
Services Finance Plc financing group

Class A wrapped

GBP350m

Type

Call
For 2019 bond: Spens call ref UKT 4.5% 2019. For 2021 bond: Spens call reference UKT8% 2021 For 2026 and
2029 bonds: Spens call reference UKT 6% 2028. For 2041 bond: Spens call reference UKT4.75% 2038 For 2052
bond: Spens call reference UKT8% 2021. Also callable for taxation and indexation reasons (if index linked).
Negative pledge
Class A wrapped bonds and Class A unwrapped bonds rank pari passu among each other in terms of interest and
principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 90%, respectively. It is an event of default if the class A ICR or the class A adjusted ICR
drop below 1.6x and 1.0x, respectively or if the senior RAR rises above 95%. The following are trigger events: Class
A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior average adjusted ICR<1.2x, senior adjusted
ICR<1.1x, class A RAR>75% or SENIOR RAR>90%. Other trigger events for class A unwrapped debt include a
rating downgrade by any two rating agencies out of three to Baa2/BBB/BBB and conditions related to liquidity
reserves (debt service payment, capex and working capital liquidity, debt service reserve liquidity facilities, O&M
reserve facility, adverse final determination of K by Ofwat). A trigger event results in locking up cash distributions to
the parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors). A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (I) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (SWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of SWS; (v) a drop in the class A
unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

534

abc

European Credit Research


Corporate Bond Covenants
September 2010

Southern Water
Bond
Coupon

Maturity

FRN
FRN

Issuer

Guarantor

Out amt

Type

31 Mar 2026 Southern Water


Southern Water
Services Finance Plc financing group

GBP350m

Sub class A
unwrapped

31 Mar 2029 Southern Water


Southern Water
Services Finance Plc financing group

GBP350m

Sub class A wrapped

Call
For 2019 bond: Spens call ref UKT 4.5% 2019. For 2021 bond: Spens call reference UKT8% 2021 For 2026 and
2029 bonds: Spens call reference UKT 6% 2028. For 2041 bond: Spens call reference UKT4.75% 2038 For 2052
bond: Spens call reference UKT8% 2021. Also callable for taxation and indexation reasons (if index linked).
Negative pledge
Class A wrapped bonds and Class A unwrapped bonds rank pari passu among each other in terms of interest and
principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 90%, respectively. It is an event of default if the class A ICR or the class A adjusted ICR
drop below 1.6x and 1.0x, respectively, or if the senior RAR rises above 95%. The following are trigger events: class
A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior average adjusted ICR<1.2x, senior adjusted
ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events for class A unwrapped debt include a rating
downgrade by any two rating agencies out of three to Baa2/BBB/BBB and conditions related to liquidity reserves
(debt service payment, capex and working capital liquidity, debt service reserve liquidity facilities, O&M reserve
facility, adverse final determination of K by Ofwat). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (I) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (SWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of SWS; (v) a drop in the class A
unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

535

abc

European Credit Research


Corporate Bond Covenants
September 2010

Southern Water
Bond
Coupon

Maturity

5%
4.5%

Issuer

Guarantor

Out amt

Type

31 Mar 2041 Southern Water


Southern Water
Services Finance Plc financing group

GBP150m

Class A wrapped

31 Mar 2052 Southern Water


Southern Water
Services Finance Plc financing group

GBP200m

Class A wrapped

Call
For 2019 bond: Spens call ref UKT 4.5% 2019. For 2021 bond: Spens call reference UKT8% 2021 For 2026 and
2029 bonds: Spens call reference UKT 6% 2028. For 2041 bond: Spens call reference UKT4.75% 2038 For 2052
bond: Spens call reference UKT8% 2021. Also callable for taxation and indexation reasons (if index linked).
Negative pledge
Class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest and
principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 90%, respectively. It is an event of default if the class A ICR or the class A adjusted ICR
drop below 1.6x and 1.0x, respectively, or if the senior RAR rises above 95%. The following are trigger events: class
A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior average adjusted ICR<1.2x, senior adjusted
ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events for class A unwrapped debt include a rating
downgrade by any two rating agencies out of three to Baa2/BBB/BBB and conditions related to liquidity reserves
(debt service payment, capex and working capital liquidity, debt service reserve liquidity facilities, O&M reserve
facility, adverse final determination of K by Ofwat). A trigger event results in locking up cash distributions to the
parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat,
appointment of additional non-executive directors). A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (SWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of SWS; (v) a drop in the class A
unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

536

abc

European Credit Research


Corporate Bond Covenants
September 2010

Southern Water
Bond
Coupon

Maturity

Issuer

Guarantor

FRN

31 Mar 2038 Southern Water


Southern Water
Services Finance Plc financing group

Out amt

Type

GBP250m

Sub class B
unwrapped

Call
Spens call prior to March 2014 reference UKT 8% 2015, par from 31 March 2014. Also callable for taxation and
indexation reasons (if index linked).
Negative pledge
Class B unwrapped bonds are subordinated in terms of interest and principal payments to the class A wrapped and
class A unwrapped bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset ratio) are
below 75% and 90%, respectively. It is an event of default if the class A ICR or the class A adjusted ICR drop below
1.6x and 1.0x, respectively, or if the senior RAR rises above 95%. The following are trigger events: class A average
adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class
A RAR>75% or senior RAR>90%. Other trigger events for class A unwrapped debt include a rating downgrade by
any two rating agencies out of three to Baa2/BBB/BBB and conditions related to liquidity reserves (debt service
payment, capex and working capital liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse
final determination of K by Ofwat). A trigger event results in locking up cash distributions to the parent and can be
remedied in various ways (remedial plan, independent review, consultation with Ofwat, appointment of additional
non-executive directors). A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (SWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of SWS; (v) a drop in the class A
unwrapped ratings below investment grade by two rating agencies.
Source: Company data, HSBC

537

abc

European Credit Research


Corporate Bond Covenants
September 2010

South West Water


Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

Type

5.875%

16 Jul 2040

South West Water


Finance plc

South West Water Ltd

GBP150m

Senior unsecured

Call
Tax call.
Negative pledge
Negative pledge covers relevant indebtedness of the issuer, the guarantor and any principal subsidiary (of the
guarantor), which includes notes, bonds, debentures, debenture stock, loan stock or other securities (other than: (i)
such notes, bonds, debentures, debenture stock, loan stock or other securities as, on issue, had a maturity of no less
than 30 years; and (ii) asset-backed bonds), whether issued for cash or, in whole or in part, for a consideration other
than cash, and which (with the agreement of the person issuing the same) are quoted, listed or ordinarily dealt in on
any stock exchange or recognised OTC or other securities market.
Put
Put at par (plus accrued interest up to the put date) if a put event occurs. A put event is when a restructuring event
occurs and is followed (during the Restructuring period of 60 days, starting from and including the date the
restructuring event occurs) by either a ratings downgrade or a negative rating event happening simultaneously with
an independent financial adviser giving a negative certification.
Covenants
None
Other
Events of default cover debt of the issuer, guarantor, and principal subsidiaries (of the guarantor) from at least
GBP15m (or equivalent in other currencies). Principal subsidiary (of the guarantor) is defined as any subsidiary
whose profits from ordinary activities before tax or net assets represent 15% or more of the consolidated profits from
ordinary activities before tax or net assets of the guarantor.
Source: Company data, HSBC

538

abc

European Credit Research


Corporate Bond Covenants
September 2010

Suez Environnement
Bond
Coupon

Maturity

4.875%

Issuer

Guarantor

Out amt

Type

08 Apr 2014 Suez Environnement None

EUR1300m

EMTN sr unsecured

6.25%

08 Apr 2019 Suez Environnement None

EUR800m

EMTN sr unsecured

4.125%

24 Jun 2022 Suez Environnement None

EUR500m

EMTN sr unsecured

5.5%

22 Jul 2024

EUR500m

EMTN sr unsecured

Suez Environnement None

Call
Tax call
Negative pledge
Negative pledge covers relevant indebtedness of the issuer and its material subsidiaries, which includes bonds,
notes, loan stock or other securities that are quoted, listed, dealt in or traded on a stock exchange or over-thecounter, or other recognised securities market. Material subsidiaries refer to Suez Environnement SA and any
subsidiary of the issuer which represents not less than 20% of the EBITDA of the issuer and/or of the consolidated
turnover of the issuer and of such subsidiary in the latest audited consolidated accounts of the Issuer and its
consolidated subsidiaries.
Put
Put at par following a change of control that is followed by a rating downgrade by Moodys during the period
commencing on the relevant announcement date and ending 180 days after the change of control. A change of
control is defined as acquisition of more than 50% of the issued/allotted ordinary share capital or voting rights of the
issuer or 40% of voting rights where others have a stake less than 40%. A rating downgrade is defined as a
downgrade of the issuers credit rating to non-investment grade or, if already at non-investment grade, a downgrade
of one full rating notch or when no credit rating is assigned.
Covenants
None
Other
Event of default includes a cross-default of the issuer and its material subsidiaries on obligations exceeding EUR100m.
Includes material change in business, ie the issuer ceases, or threatens to cease, to carry on the whole, or substantially
the whole, of its business. Material subsidiaries refer to Suez Environnement SA and any subsidiary of the issuer which
represents no less than 20% of the EBITDA of the issuer and/or of the consolidated turnover of the issuer and of such
subsidiary in the latest audited consolidated accounts of the issuer and its consolidated subsidiaries.
Source: Company data, HSBC

539

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.125%

04 Feb 2013 Thames Water Utilities TWUL, TWHL, TWUFL EUR500m


Cayman Finance Ltd and TWUCFHL

Type
Guaranteed class A
unwrapped bond issued
under the companys
GBP10bn multicurrency programme

Call
Tax call, Indexation call.
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
Bondholder put at par if put event occurs, where put event is: a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is the withdrawal of a rating or downgrade to below investment grade or, if already
below investment grade, a further downgrade of one full rating category. In this case S&P is defined as the rating
agency but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is equals
or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset ratio) are below
75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date), respectively. The following are
trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior average adjusted ICR<1.2x, senior
adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events for class A unwrapped debt conditions
related to liquidity reserves (debt service payment, capex and working capital liquidity, debt service reserve liquidity facilities,
O&M reserve facility, adverse final determination of K by Ofwat). A trigger event results in locking up cash distributions to
the parent and can be remedied in various ways (remedial plan, independent review, consultation with Ofwat, appointment
of additional non-executive directors. A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (I) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

540

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

4.9%

30 Jun 2015 Thames Water Utilities TWUL, TWHL, TWUFL GBP200m


Cayman Finance Ltd and TWUCFHL

Type
EMTN programme
senior unsecured

Call
Tax call.
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
Bondholder put at par if put event occurs, where put event is a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is withdrawal of a rating or a downgrade to below investment grade or, if already below
investment grade, a further downgraded of one full rating category. In this case S&P is defined as the rating agency
but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equals or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date)
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt conditions related to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat, appointment of additional non-executive directors). A trigger event
is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

541

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.75%

16 Nov 2028 Thames Water Utilities TWUL, TWHL, TWUFL GBP330m


Cayman Finance Ltd and TWUCFHL

Type
USD1b EMTN series
11, tranche 1

Call
Tax call. Spens call after 16/11/01 reference UKT 6% 2028.
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
Bondholder put at par if put event occurs, where put event is: a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is withdrawal of a rating or a downgrade to below investment grade or, if already below
investment grade, a further downgrade of one full rating category. In this case S&P is defined as the rating agency
but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt conditions relate to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat, appointment of additional non-executive directors. A trigger event
is not an event of default).
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively. or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

542

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6.5%

09 Feb 2032 Thames Water Utilities TWUL, TWHL, TWUFL GBP200m


Cayman Finance Ltd and TWUCFHL

Type
USD3b EMTN series
22, tranche 1

Call
Tax call. For 2010 bond: Spens call after 9/2/02 reference UKT 6% 2028. For 2028 bond: Spens call after
16/11/01 reference UKT 6% 2028.
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
Bondholder put at par if put event occurs, where put event is: a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is withdrawal of a rating or a downgrade to below investment grade or, if already below
investment grade, a further downgrade of one full rating category. In this case S&P is defined as the rating agency
but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x,
Senior average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger
events for class A unwrapped debt conditions relate to liquidity reserves (debt service payment, capex and working
capital liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by
Ofwat). A trigger event results in locking up cash distributions to the parent and can be remedied in various ways
(remedial plan, independent review, consultation with Ofwat, appointment of additional non-executive directors). A
trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

543

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.125%

28 Sep 2037 Thames Water Utilities TWUL, TWHL, TWUFL GBP600m


Cayman Finance Ltd and TWUCFHL

Type
EMTN programme
senior unsecured

Call
Tax call. For 2010 bond: Spens call after 9/2/02 reference UKT 6% 2028. For 2028 bond: Spens call after 16/11/01
reference UKT 6% 2028.
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
Bondholder put at par if put event occurs, where put event is: a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is withdrawal of a rating or a downgrade to below investment grade or, if already below
investment grade, a further downgrade of one full rating category. In this case S&P is defined as the rating agency
but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equals or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt conditions relate to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat, appointment of additional non-executive directors). A trigger event
is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

544

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

11 Jul 2053

Thames Water Utilities TWUL, TWHL, TWUFL GBP300m


Cayman Finance Ltd and TWUCFHL

Type
EMTN programme
senior unsecured

Call
Tax call. For 2010 bond: Spens call after 9/2/02 reference UKT 6% 2028. For 2028 bond: Spens call after 16/11/01
reference UKT 6% 2028.
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
Bondholder put at par if put event occurs, where put event is: a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is withdrawal of a rating or a downgrade to below investment grade or, if already below
investment grade, a further downgrade of one full rating category. In this case S&P is defined as the rating agency
but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt conditions relate to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat, appointment of additional non-executive directors). A trigger event
is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

545

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

09 Apr 2058 Thames Water Utilities TWUL, TWHL, TWUFL GBP400m


Cayman Finance Ltd and TWUCFHL

Type
Guaranteed class A
unwrapped bond issued
under the GBP10bn
programme

Call
Spens call and callable for taxation reasons
Negative pledge
The Class A Wrapped Bonds and Class A Unwrapped Bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the Class B Bonds.
Put
Bondholder put at par if put event occurs, where put event is: a) Thames Water Utilities appointment as water or
sewerage undertaker is terminated; or b) Thames Water Utilities Limited ceases to be a subsidiary of Thames Water
Plc; or c) there is a restructuring event AND within 45 days there is also a rating downgrade. A restructuring event is
defined as: i) a modification of Thames Waters appointment; or ii) enactment of legislation removing, reducing or
qualifying the duties or powers of the Secretary of State for the Environment and/or or the Director General of Water
Services. A rating downgrade is withdrawal of a rating or a downgrade to below investment grade or, if already below
investment grade, a further downgrade of one full rating category. In this case S&P is defined as the rating agency
but may be substituted for other agencies with approval of the trustee.
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt conditions relate to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat, appointment of additional non-executive directors). A trigger event
is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL.
Source: Company data, HSBC

546

abc

European Credit Research


Corporate Bond Covenants
September 2010

Thames Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.375%

21 Jul 2025

Thames Water Utilities TWUL, TWHL, TWUFL GBP550m


Cayman Finance Ltd and TWUCFHL

5.750%

13 Sep 2030 Thames Water Utilities TWUL, TWHL, TWUFL GBP300m


Cayman Finance Ltd and TWUCFHL

Type
Sub-class B1
guaranteed
unwrapped bonds
Subordinated and
SECURED CLASS B

Call
Tax call; Index call (if index-linked); 2015 bond: Issuer call at par with initial call date of 21 July 2017 2015 bond;
2030 bond: Issuer call at par with initial call date of 13 September 2022.
Negative pledge
The Class B wrapped bonds and the class B Unwrapped Bonds rank pari passu among each other and are
subordinated in terms of interest and principal payments to the class A bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt conditions relate to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat, appointment of additional non-executive directors). A trigger event
is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 85% (prior to ratio step date) or
95% (from and including ratio step date); (ii) the transfer, termination or revocation of the instrument of appointment
(TWUL licence); (iii) insufficient liquidity to meet capex and working capital requirements projected for the next six
months; (iv) a change of control of TWUL. Step-up for the 2025 bond: From and including 21 July 2017 up to 21 July
2025: at 3-month GBP LIBOR + 7.96% p.a.; step-up for the 2030 bond: From 13 September 2022: 3m GBP LIBOR +
796bp.
Source: Company data, HSBC

547

abc

European Credit Research


Corporate Bond Covenants
September 2010

United Utilities
Bond
Coupon

Maturity

4.25%

Issuer

Guarantor

Out amt

Type

24 Jan 2020 United Utilities Water plc None

EUR500m

Senior unsecured

5.625%

20 Dec 2027 United Utilities Water plc None

GBP300m

EMTN sr unsecured

5%

28 Feb 2035 United Utilities Water plc None

GBP200m

Senior unsecured

FRN

07 Jul 2056

United Utilities Water plc None

GBP100m

EMTN sr unsecured

FRN

28 Jul 2056

United Utilities Water plc None

GBP100m

EMTN sr unsecured

FRN

11 Aug 2056 United Utilities Water plc None

GBP100m

EMTN sr unsecured

Call
Tax and indexation calls (if index linked).
Negative pledge
Negative pledge covers public debt only and specifically excludes debt with initial maturity of 20 years or more and
does not exceed the greater of GBP250m or 20% of adjusted capital and reserves OR any debt with stated maturity
of one year or less.
Put
None
Covenants
None
Other
Events of default include cross-default on obligations totalling the greater of GBP30m or 2% of adjusted capital and
reserves. It covers the obligations of issuer, guarantor, or any material subsidiary defined as a subsidiary with
gross revenues or gross assets equal to 20% or more of consolidated revenues or assets.
Source: Company data, HSBC

548

abc

European Credit Research


Corporate Bond Covenants
September 2010

United Utilities
Bond
Coupon

Maturity

6.125%
5.75%

Issuer

Guarantor

Out amt

Type

29 Dec 2015 United Utilities Water plc None

GBP425m

EMTN sr unsecured

25 Mar 2022 United Utilities Water plc None

GBP375m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers securities of the issuer and the parent, which includes bonds, debentures, notes or other
securities which are or are to be quoted, listed, or traded on any stock exchange, over-the-counter or other
securities market.
Put
None
Covenants
None
Other
Events of default include cross-default on obligations totalling whichever is the greater of GBP30m and 2% of the
adjusted capital and reserves. It covers the obligations of issuer or any material subsidiary. A material subsidiary is
defined as a subsidiary with gross revenues or gross assets equal to 20% or more of consolidated revenues or assets.
Source: Company data, HSBC

549

abc

European Credit Research


Corporate Bond Covenants
September 2010

United Utilities
Bond
Coupon

Maturity

Issuer

8.875%

25 Mar 2026 United Utilities


Electricity plc

Guarantor

Out amt

Type

None

GBP450m

Senior unsecured
Series RG & BR

Call
Spens call reference UKT 8.75% 2017.
Negative pledge
None
Put
A put event occurs when there is a restructuring event and either a rating downgrade or negative rating event, and the
event is deemed to be materially prejudicial to bondholders. A restructuring event is defined as the loss or modification of
PES licence, or a change in legislation removing the Secretary of State for Trade and Industry from duties.
Covenants
None
Other
Events of default include cross default of issuer or any principal subsidiary for obligations exceeding the greater of
GBP20m and 3% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose net profits
before tax or gross assets represent 20% or more of the consolidated net profits before tax or consolidated gross
assets, as calculated in the latest audited financial statements.
Source: Company data, HSBC

550

abc

European Credit Research


Corporate Bond Covenants
September 2010

Veolia Environnement
Bond
Coupon

Maturity

5.875%

Issuer

Guarantor

Out amt

Type

01 Feb 2012 Veolia Environnement None

EUR671m

EMTN sr unsecured

4.875%

28 May 2013 Veolia Environnement None

EUR550m

EMTN sr unsecured

FRN

17 Jun 2015 Veolia Environnement None

EUR875m

Senior unsecured

4%

12 Feb 2016 Veolia Environnement None

EUR900m

Senior unsecured

4.375%

16 Jan 2017 Veolia Environnement None

EUR1140m

Senior unsecured

5.375%

28 May 2018 Veolia Environnement None

EUR750m

EMTN sr unsecured

4.375%

11 Dec 2020 Veolia Environnement None

EUR600m

Senior unsecured

5.125%

24 May 2022 Veolia Environnement None

EUR1000m

Senior unsecured

6.125%

25 Nov 2033 Veolia Environnement None

EUR700m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers present and future indebtedness issued by the issuer and principal subsidiaries in the form
of bonds, notes, debentures and loan stocks. Principal subsidiaries are directly or indirectly controlled by the issuer
or owned 50% or more and represent more than 15% of the total consolidated assets or consolidated operating
incomes in the latest audited financial statements.
Put
None
Covenants
None
Other
Events of default include cross-default on amounts due by the issuer, guarantor or any principal subsidiary, subject
to a carve-out of EUR30m. Principal subsidiaries are directly or indirectly controlled by the issuer or owned 50% or
more, and represent more than 15% of the total consolidated assets or consolidated operating incomes in the latest
audited financial statements.
Source: Company data, HSBC

551

abc

European Credit Research


Corporate Bond Covenants
September 2010

Veolia Environnement
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.875%

13 Jul 2026

Three Valleys Water Three Valleys Water Plc GBP200m


Finance Plc

Type
Senior unsecured

Call
Spens call reference UKT 5% 2025
Negative pledge
Negative pledge covers relevant indebtedness and guarantee of relevant indebtedness of issuer, guarantor, principal
subsidiary. Relevant indebtedness excludes debt with a maximum aggregate amount not exceeding the greater of
GBP75m and 15% of regulated asset value, and which is issued by an issuer becoming a subsidiary of the guarantor
after 28 June 2004. Relevant indebtedness includes money borrowed, liabilities under acceptance credit, notes,
bonds, debentures, debenture stock, loan stock or other securities, which are quoted, listed or dealt on any stock
exchange or over-the-counter or other securities market, which does not include project finance indebtedness. A
principal subsidiary is a subsidiary of the guarantor whose profits on ordinary activities before tax or net assets
represent 15% or more of the consolidated profits on ordinary activities before tax or consolidated net assets, as
calculated in the latest audited financial statements.
Put
A put event occurs when there is a restructuring event and a rating downgrade (investment grade to non-investment
grade or, if already non-investment grade, then one notch down) or a negative rating event. A restructuring event is
defined as material modification of any material terms of guarantors appointment under the Water Industry Act or the
enactment of any legislation changing the powers of the Secretary of State for the Environment or the Director
General of Water Services.
Covenants
None
Other
Events of default include cross-default of issuer, guarantor or any principal subsidiary for obligations exceeding the
greater of GBP15m and 1.5% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose
profits on ordinary activities before tax or net assets represent 15% or more of the consolidated profits on ordinary
activities before tax or consolidated net assets, as calculated in the latest audited financial statements.
Source: Company data, HSBC

552

abc

European Credit Research


Corporate Bond Covenants
September 2010

Veolia Environnement
Bond
Coupon

Maturity

5.25%

Issuer

Guarantor

Out amt

Type

24 Apr 2014 Veolia Environnement None


SA

EUR1250m

EMTN sr unsecured

6.75%

24 Apr 2019 Veolia Environnement None


SA

EUR750m

EMTN sr unsecured

FRN

06 Jan 2021 Veolia Environnement None


SA

EUR834m

EMTN sr unsecured

6.125%

29 Oct 2037 Veolia Environnement None


SA

GBP650m

EMTN sr unsecured

Call
Tax call.
Negative pledge
Negative pledge covers the indebtedness of the issuer and principal subsidiaries, which includes bonds, notes,
debentures and loan stocks or other securities that, at the time of issue, are capable of being, or intended to be,
quoted, listed or ordinarily dealt in on any stock exchange, automated trading system, OTC or other securities
market.
Put
None
Covenants
None
Other
Events of default include cross-default of issuer and/or principal subsidiaries on obligations of EUR50m or above.
Principal subsidiaries are defined as a subsidiary of the issuer whose total assets or operating income attributable to
the issuer represent not less than 15% of the total consolidated assets or operating income of the issuer, all as
calculated by reference to the then-latest audited accounts of such subsidiary, issuer and its consolidated
subsidiaries.
Source: Company data, HSBC

553

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wessex Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.375%

10 Mar 2028 Wessex Water


Wessex Water Services GBP200m
Services Finance Plc Limited

Type
Senior unsecured

Call
Spens call reference UKT 6% 2028
Negative pledge
Negative pledge covers relevant indebtedness and guarantee of relevant indebtedness of issuer, guarantor, principal
subsidiary where such relevant indebtedness excludes debt with a maximum aggregate amount not exceeding the
greater of GBP150m and 15% of capital and reserves, and which is issued by a issuer becoming a subsidiary of the
guarantor after 10 March 2005. Relevant indebtedness includes notes, bonds, debentures, debenture stock, loan
stock or other securities, which are quoted, listed or dealt on any stock exchange or over-the-counter or other
securities market, which, on issue, have a maturity of no less than 30 years, and which do not include project finance
indebtedness. A principal subsidiary is a subsidiary of the guarantor whose profits on ordinary activities before tax or
net assets represent 15% or more of the consolidated profits on ordinary activities before tax or consolidated net
assets, as calculated in the latest audited financial statements.
Put
A put event occurs when there is a Restructuring event and a rating downgrade (investment grade to non-investment
grade or, if already non-investment grade, then one notch down) or a negative rating event. A restructuring event is
defined as material modification of any material terms of guarantors appointment under the Water Industry Act or
enactment of legislation changing the powers of the Secretary of State for the Environment or the Director General of
Water Services.
Covenants
None
Other
Events of default include cross-default of Issuer, guarantor or any principal subsidiary for obligations exceeding the
greater of GBP15m and 1.5% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose
profits on ordinary activities before tax or net assets represent 15% or more of the consolidated profits on ordinary
activities before tax or consolidated net assets, as calculated in the latest audited financial statements.
Source: Company data, HSBC

554

abc

European Credit Research


Corporate Bond Covenants
September 2010

Wessex Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

5.75%

14 Oct 2033 Wessex Water


Wessex Water Services GBP350m
Services Finance Plc Limited

Type
Senior unsecured

Call
Spens call reference UKT 4.25% 2032.
Negative pledge
Negative pledge covers relevant indebtedness and guarantee of relevant indebtedness of issuer, guarantor, principal
subsidiary where such relevant indebtedness excludes debt with a maximum aggregate amount not exceeding the
greater of GBP150m and 15% of capital and reserves, and which is issued by a issuer becoming a subsidiary of the
guarantor after 15 October 2003. Relevant indebtedness includes notes, bonds, debentures, debenture stock, loan
stock or other securities, which are quoted, listed or dealt on any stock exchange or over-the-counter or other
securities market, which, on issue, have a maturity of no less than 30 years, and which do not include project finance
indebtedness. A principal subsidiary is a subsidiary of the guarantor whose profits on ordinary activities before tax or
net assets represent 15% or more of the consolidated profits on ordinary activities before tax or consolidated net
assets, as calculated in the latest audited financial statements.
Put
A put event occurs when there is a restructuring event and a rating downgrade (investment grade to non-investment
grade or, if already non-investment grade, then one notch down) or a negative rating event. A restructuring event is
defined as material modification of any material terms of guarantors appointment under the Water Industry Act or
enactment of legislation changing the powers of the Secretary of State for the Environment or the Director General of
Water Services.
Covenants
None
Other
Events of default include cross default of issuer, guarantor or any principal subsidiary for obligations exceeding the
greater of GBP15m and 1.5% of capital and reserves. A principal subsidiary is a subsidiary of the guarantor whose
profits on ordinary activities before tax or net assets represent 15% or more of the consolidated profits on ordinary
activities before tax or consolidated net assets, as calculated in the latest audited financial statements.
Source: Company data, HSBC

555

abc

European Credit Research


Corporate Bond Covenants
September 2010

Yorkshire Water
Bond
Coupon

Maturity

Issuer

Guarantor

01 Aug 2056 Yorkshire Water


FRN
Yorkshire Water
Step Up
Services Finance plc Services Ltd
(see Other)

Out amt

Type

GBP125m

Senior unsecured

Call
Tax call, Indexation call.
Negative pledge
Relevant indebtedness excludes bank debt and project finance indebtedness. Allows for secured debt with maturity
after 1 August 2051 and subject to an overall limit of the greater of GBP300m or 15% of capital and reserves.
Existing secured debt of any subsidiaries acquired after 16 November 2006 is also excluded.
Put
Bondholder put at par if put event occurs, defined as: 1) Yorkshire Water Services Limiteds (YWSL) appointment
under the Water Industry Act is terminated; or 2) a restructuring event occurs and within 90 days a rating downgrade
(defined as withdrawal or downgrade to below investment grade or, if already below investment grade, the rating is
downgraded one full rating category) or (if not rated) a negative rating event occurs (defined as when the issuer is
unable to obtain an investment grade rating or does not seek to obtain a rating). A restructuring event is defined as
modification of any material rights, benefits or obligations of YWSLs appointment or enactment of legislation
removing, reducing or qualifying the duties or powers of the Secretary of State for the Environment or the Director
General of Water Services.
Covenants
None
Other
Events of default include cross-default on amounts owed by the issuer, guarantor or principal subsidiaries in an
amount that is the greater of GBP20m or 1.5% of capital and reserves. Principal subsidiaries is any subsidiary of the
guarantor with pre-tax profits on ordinary activities or net assets representing 15% or more of the consolidated total.
For the period through to 17 October 2001: if ratings are downgraded to Baa1/BBB+ by Moodys/S&P, respectively,
the coupon steps up to 6.875%. If downgraded to Baa2/BBB or below, the coupon steps up to 7.125%.
Source: Company data, HSBC

556

abc

European Credit Research


Corporate Bond Covenants
September 2010

Yorkshire Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

6%

21 Aug 2019 Yorkshire Water


GBP275m
YWSHL, YWSL,
Services Finance plc YWSFL, YWSOFHL and
YWSOFL

Senior unsecured
issued under the
companys GBP8bn
EMTN programme.

6%

24 Apr 2017 Yorkshire Water


Services Bradford
Finance Ltd

Junior sub-class B1
issued under the
GBP8bn guaranteed
bond programme

YWSHL, YWSL,
GBP450m
YWSFL, YWSOFHL and
YWSOFL

Type

Call
Spens call, tax call and Indexation call (if index linked).
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to
Baa2/BBB/BBB or a rating withdrawal related to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat). A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (YWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of YWS.
Source: Company data, HSBC

557

abc

European Credit Research


Corporate Bond Covenants
September 2010

Yorkshire Water
Bond
Coupon

Maturity

Issuer

6.375%

19 Aug 2039 Yorkshire Water


Services Bradford
Finance Ltd

Guarantor

Out amt

GBP300m
YWSHL, YWSL,
YWSFL, YWSOFHL and
YWSOFL

Type
Senior sub-class A2
issued under the
GBP8bn guaranteed
bond programme

Call
Spens call, tax call and indexation call (if index linked).
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equals or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to
Baa2/BBB/BBB or a rating withdrawal related to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat). A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (i) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively, or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (YWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of YWS.
Source: Company data, HSBC

558

abc

European Credit Research


Corporate Bond Covenants
September 2010

Yorkshire Water
Bond
Coupon

Maturity

Issuer

Guarantor

Out amt

FRN

30 Dec 2039 Yorkshire Water


GBP260m
YWSHL, YWSL,
Services Finance plc YWSFL, YWSOFHL and
YWSOFL

Type
Senior sub-class A3
issued under the
company's GBP8bn
EMTN Programme.

Call
Spens call, tax call and indexation call (if index linked).
Negative pledge
The class A wrapped bonds and class A unwrapped bonds rank pari passu among each other in terms of interest
and principal payments and rank in priority to the class B bonds.
Put
None
Covenants
Incurrence of further permitted indebtedness is possible as long as the class A adjusted ICR (interest cover ratio) is
equal to or above 1.3x and the class A RAR (regulated asset ratio for class A) and the senior RAR (regulated asset
ratio) are below 75% and 75% (prior to the ratio step date) or 90% (from and including the ratio step date),
respectively. The following are trigger events: class A average adjusted ICR<1.4x, class A adjusted ICR<1.3x, senior
average adjusted ICR<1.2x, senior adjusted ICR<1.1x, class A RAR>75% or senior RAR>90%. Other trigger events
for class A unwrapped debt include a downgrade of the shadow rating by any two rating agencies out of three to
Baa2/BBB/BBB or a rating withdrawal related to liquidity reserves (debt service payment, capex and working capital
liquidity, debt service reserve liquidity facilities, O&M reserve facility, adverse final determination of K by Ofwat). A
trigger event results in locking up cash distributions to the parent and can be remedied in various ways (remedial
plan, independent review, consultation with Ofwat). A trigger event is not an event of default.
Other
Events of default include a number of conditions among which the most notable are: (I) class A ICR or the class A
adjusted ICR falling below 1.6x and 1.0x, respectively or senior RAR rising above 95%; (ii) the transfer, termination
or revocation of the instrument of appointment (YWS licence); (iii) insufficient liquidity to meet capex and working
capital requirements projected for the next six months; (iv) a change of control of YWS.
Source: Company data, HSBC

559

European Credit Research


Corporate Bond Covenants
September 2010

560

abc

European Credit Research


Corporate Bond Covenants
September 2010

abc

Hybrids

561

abc

European Credit Research


Corporate Bond Covenants
September 2010

Bayer
Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

29 Jul 2105

Bayer AG

None

EUR1,300m

Mandatory and
optional

Fixed coupon

Floating

Equity credit

5% fixed (annually) until


29 July 2015

3m Euribor + 180bps + 100bps step up


(quarterly)

S&P (50%), Moodys (Basket D)

Call
Callable at par, in full only, on 29 July 2015 and each year thereafter. The issuer can also, at any time, redeem the
bonds in full for tax reasons/gross-up event before 29 July 2015.
Subordination
Subordinated, unsecured. Junior to all but shareholders of the issuer.
Optional coupon deferral
Optional deferral upon no common dividend payment or share buyback. Cumulative and payable in cash at the
earlier of resumption of dividends or 10 years.
Mandatory deferral
Mandatory in the case of cash flow event, defined as consolidated gross cash flow of <7% of consolidated sales
revenues. Deferred coupons may be paid by ACSM (alternative coupon satisfaction mechanism) or cancelled.
Change of control
None
Refunding redemption
Replacement clause stating Bayer's intention if it chooses to call the current issue, is to do so using the proceeds
from common equity or from securities ranking pari passu or junior to the bonds, with the same terms and conditions,
and issued in the six months prior to redemption".
Events of default
None, except insolvency and liquidation.
Other
No cross-default clause. Limitation on additional subordinated indebtedness, which would rank junior to the
subordinated bonds due 2105.
Source: Company data, HSBC Global Research

562

abc

European Credit Research


Corporate Bond Covenants
September 2010

Casino Guichard Perrachon


Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

Perp

Casino Guichard
Perrachon SA

None

EUR600m

Optional noncumulative

Fixed coupon

Floating

Equity credit

7.5% fixed (annually) until


20 January 2008

10yr EUR CMS + 100 floating (quarterly)


S&P (50%), Fitch (50%)
thereafter. The coupon rate is capped at 9%

Call
Callable at par, in full only, on 20 January 2010 and each quarter thereafter. The issuer can also, at any time, call the
bonds in full for tax reasons or purchase the bonds in full at the market price.
Subordination
Deeply subordinated, unsecured. Junior to all but shareholders of the issuer.
Optional coupon deferral
Optional deferral if no dividend payment or share buyback by the issuer and its subsidiaries is announced in the
previous 12 months. Deferred coupon is non-cumulative.
Mandatory deferral
None
Change of control
None
Refunding redemption
None
Events of default
None
Other
None
Source: Company data, HSBC Global Research

563

abc

European Credit Research


Corporate Bond Covenants
September 2010

Dong Energy
Bond
Coupon type

Maturity

Issuer

Fixed to floating

29 Jun 3005 Dong A/S

Guarantor

Out amt

Type

None

EUR1,100m

Optional cumulative

Fixed coupon

Floating

Equity credit

5.50% annually until


28 June 2015

3m EUR+320bps until 2505, adding


another 100bp thereafter

S&P (50%)

Call
Callable on coupon dates falling between 29 June 2010 and 29 June 2014 at early redemption amount (bund + a
margin sliding scale in prospectus) plus accrued interest and any outstanding payments. Callable at par plus
accrued interest and outstanding payments on each coupon date thereafter. Tax call.
Subordination
Subordinated, unsecured. Ranks behind the claims of senior creditors and in priority to the claims of holders of
outstanding payments and ordinary shares.
Optional coupon deferral
The issuer can meet deferred payment obligations through the issuance of new ordinary shares up to 2% of its
outstanding share capital, and/or the issuance of securities of the same rank, and/or pay in kind up to 25% of the
initial principal amount. Until all outstanding payments have been satisfied, the company may not declare or pay
ordinary dividends, acquire any of its ordinary shares or parity securities. Cumulative.
Mandatory deferral
None
Change of control
None
Refunding redemption
It is Dong's intention not to redeem the securities unless ordinary shares or pari passu securities with identical
maturity, ranking, deferral and replacement language have been issued by Dong or any subsidiary in the preceeding
12 months.
Events of default
Bankruptcy
Other
None
Source: Company data, HSBC Global Research

564

abc

European Credit Research


Corporate Bond Covenants
September 2010

Eurofins Scientific
Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

Perp

Eurofins Scientific

None

EUR100m

Optional cumulative

Fixed coupon

Floating

Equity credit

8.081% fixed (annually) until


22 May 2014

3m Euribor + 620bp (payable quarterly).


Represents a 250bp step up

Unrated

Call
Callable at par, in full only, on 22 May 2014 and each quarter thereafter or at any time following a change of control
event (see below). The issuer can also redeem the bonds in full at the greater of par and its make-whole amount for
certain tax and accounting reasons.
Subordination
Deeply subordinated, unsecured. Pari passu with all other present and future deeply subordinated bonds of the
issuer but junior to titres participatifs/prts participatifs, ordinary subordinated obligations and unsubordinated
obligations. Rank in priority to any classes of share capital securities.
Optional coupon deferral
The issuer may defer interest payment provided the issuer has not paid a dividend or other distribution. Deferred
interest is cumulative. Deferred coupons paid from the ACSM and/or issue of new parity securities.
Mandatory deferral
None
Change of control
If a change of control (>50%) occurs and Eurofins has no investment grade rating on the date of change of control,
then the notes are callable at par plus accrued interest.
Refunding redemption
None
Events of default
None
Other
None
Source: Company data, HSBC Global Research

565

abc

European Credit Research


Corporate Bond Covenants
September 2010

Eurogate
Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

Perp

Eurogate GmbH &


KGaA, KG

None

EUR150m

Optional cumulative

Fixed coupon

Floating

Equity credit

6.75% fixed (annually) until


28 May 2017

3m Euribor + 440bps (payable quarterly). Unrated


Represents a 200bp step up

Call
Callable at the greater of par plus accrued interest minus outstanding interest arrears, in full only, on 28 May 2017
and each quarter thereafter or at any time. Call at par or make-whole following a gross-up event or a change of
control event (see below) and also for certain tax and accounting reasons.
Subordination
Deeply subordinated, unsecured. Junior to all other unsubordinated and subordinated creditors.
Optional coupon deferral
Optional deferral at the sole discretion of the issuer. Deferred interest is cumulative and payable when: 1) the issuer
has declared or made any distribution to a limited partner (Kommanditist) or common dividends are resumed; 2) the
issuer has made or declared any distribution to an unlimited partner (Komplementaer); 3) payments are made by the
issuer or any subsidiary on parity or junior securities; 4) repurchases of parity or junior securities; and 5) the issuer
enters into a liquidation, winding up or dissolution.
Mandatory deferral
None
Change of control
If a change of control (management power in the issuer or in an unlimited partner) occurs and the company has no
investment grade rating on the date of change of control, then the notes are callable at the higher of par or makewhole amount (sum of the present values as at the date of redemption of par plus remaining scheduled payments
excluding the first call date).
Refunding redemption
None
Events of default
Liquidation, winding-up, dissolution (other than for the purposes of re-organisation or restructuring while solvent).
Other
None
Source: Company data, HSBC Global Research

566

abc

European Credit Research


Corporate Bond Covenants
September 2010

Henkel
Bond
Coupon type

Maturity

Issuer

Fixed to floating

25 Nov 2104 Henkel KGaA

Guarantor

Out amt

Type

None

EUR1,300m

Mandatory and
optional

Fixed coupon

Floating

Equity credit

5.375% fixed (annually) until


25 November 2015

3m EUR + 285bp floating (quarterly)


thereafter. Represents a 100bp step up
(issued at 3m EUR + 185bp)

S&P (50%), Fitch (25%)

Call
Callable at par, in full only, on 25 November 2015 and each quarter thereafter. The issuer can also redeem the
bonds in whole at the higher of 1) par, or 2) the price at which the bonds yield to call is equal to bunds + 75bps if a
tax event/gross-up event occurs before 25 November 2015. In each case, a call is subject to the conditions of the
replacement provision below.
Subordination
Deeply subordinated, unsecured. Junior to all but shareholders of the issuer.
Optional coupon deferral
Optional deferral if cash flow from operations (before working capital changes) is less than 20% of pension-adjusted net
debt (and including half of the principal amount of the bonds). Deferred interest is cumulative and payable in cash at the
earlier of: 1) the resumption of dividend payments to holders of equity or parity/junior securities; and 2) five years.
Mandatory deferral
Mandatory deferral if cash flow from operations (before working capital changes) is less than 15% of pension-adjusted
net debt (and including half of the principal amount of the bonds). Deferred interest is cumulative and payable at the
earlier of: 1) the resumption of dividend payments to holders of equity or parity/junior securities; and 2) five years.
Payment cannot be made in cash but instead only using proceeds from the issuance of preferred shares or through PIK.
Change of control
None
Refunding redemption
Replacement provision stating Henkel's intention if it chooses to call the current issue is to do so using the proceeds
from 1) common equity/preferred shares, or 2) securities that have a maturity of at least 99 years, rank pari passu to
the bonds, have equal or greater equity credit, have the same or similar coupon deferral terms, contain an identical
capital replacement provision, and can be issued in the six months prior to redemption.
Events of default
None except insolvency and liquidation.
Other
No cross-default clause.
Source: Company data, HSBC Global Research

567

abc

European Credit Research


Corporate Bond Covenants
September 2010

Linde
Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

14 Jul 2066

Linde Finance BV

Linde AG

EUR700m

Optional cumulative

Fixed coupon

Floating

Equity credit

7.375% fixed (annually) until


14 July 2016

3m Euribor+412.5bp per annum (payable S&P (50%)


quarterly). Represents a 100bp step up

Call
Callable at par, in full only, on 14 July 2016 and on any floating interest payment date thereafter. The issuer can also
redeem the bonds if the following events occur before 14 July 2016: gross-up event (at par), a capital event/tax
event/accounting event (at the higher of par or make-whole), a BOC event (at 101%), a conversion event (at the
higher of par or the special make-whole amount) or clean-up (outstanding amount <25%) (at par). Callable at par in
the case of a change of control; if not called, interest steps up by 5% per annum.
Subordination
Deeply subordinated, unsecured. Junior to all but shareholders of the issuer.
Optional coupon deferral
The issuer may defer interest payment unless: 1) Linde AG has declared or paid a dividend or bought back shares or
made a payment of any nature on or in respect of any parity securities or junior securities; 2) or if it so decides.
Deferred coupons paid through the issuance and/or sale of ordinary shares up to 2% of its outstanding share capital.
Mandatory deferral
None
Change of control
None
Refunding redemption
Replacement provision stating Linde's intention to redeem the bonds by using the proceeds from securities dated 60
years or more, or common equity issued by the parent/financial vehicle. The issue replacing the notes must have the
same terms and conditions regarding deferral, call, step up and replacement, and be issued in the six months prior to
redemption. The replacement clause will also apply if Linde redeems the notes as a result of a change in rating
agencies perception of its equity content, or of any adverse material change in tax and accounting treatment. This
does not apply in the event of the conversion to equity of Linde's outstanding EUR550m 2009 convertible bond.
Events of default
Non-payment, insolvency, liquidation or if the guarantee ceases to be in full force.
Other
No cross-default clause.
Source: company data, HSBC Global Research

568

abc

European Credit Research


Corporate Bond Covenants
September 2010

Linde
Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

14 Jul 2066

Linde Finance BV

Linde AG

GBP250m

Optional cumulative

Fixed coupon

Floating

Equity credit

8.125% fixed (annually) until


14 July 2016

3m GBP Libor + 412.5bp per annum


(payable quarterly), ie 100bp step up

S&P (50%)

Call
Callable at par, in full only, on 14 July 2016 and on any floating interest payment date thereafter. The issuer can also
redeem the bonds if the following events occur before 14 July 2016: gross-up event (at par), a capital event/tax
event/accounting event (at the higher of par or make-whole), a BOC event (at 101%) or clean-up (outstanding amount
<25%) (at par). Callable at par in the case of a change of control; if not called, interest steps up by 5% per annum.
Subordination
Deeply subordinated, unsecured. Junior to all but shareholders of the issuer.
Optional coupon deferral
The issuer may defer interest payment unless: 1) Linde AG has declared or paid a dividend or bought back shares,
or made a payment of any nature on or in respect of any parity securities or junior securities; 2) or if it so decides.
Deferred coupons paid through the issuance and/or sale of ordinary shares up to 2% of its outstanding share capital.
Mandatory deferral
None
Change of control
None
Refunding redemption
Replacement provision stating Linde's intention to redeem the bonds by using proceeds from securities dated 60 years
or more, or common equity issued by the parent/financial vehicle. The issue replacing the notes must have the same
terms and conditions regarding deferral, call, step-up and replacement, and be issued in the six months prior to
redemption. The replacement clause will also apply if Linde redeems the notes as a result of a change in rating
agencies perception of its equity content, or of any adverse material change in tax and accounting treatment. This
clause does not apply in the event of the conversion to equity of Linde's outstanding EUR550m 2009 convertible bond.
Events of default
For non-payment, insolvency, liquidation or if the guarantee ceases to be in full force.
Other
No cross-default clause.
Source: Company data, HSBC Global Research

569

abc

European Credit Research


Corporate Bond Covenants
September 2010

Linde
Bond
Coupon type

Maturity

Issuer

Guarantor

Out amt

Type

Fixed to floating

Perp

Linde Finance BV

Linde AG

EUR400m

Optional cumulative

Fixed coupon

Floating

Equity credit

6% fixed (annually) until


3 July 2013

3m Euribor + 337.5bps (quarterly)


thereafter

S&P (50%)

Call
Callable at par, in whole only, on 3 July 2013 and each year thereafter. The issuer can also redeem the bonds in
whole if a tax event/gross-up event occurs before 3 July 2013.
Subordination
Subordinated, unsecured.
Optional coupon deferral
Optional deferral upon no common dividend payment or share buyback. Cumulative.
Mandatory deferral
None
Change of control
None
Refunding redemption
None
Events of default
For non-payment, insolvency, liquidation or if the guarantee ceases to be in full force.
Other
No cross-default clause.
Source: Company data, HSBC Global Research

570

abc

European Credit Research


Corporate Bond Covenants
September 2010

Lottomatica
Bond
Coupon type

Maturity

Issuer

Fixed to floating

31 Mar 2066 Lottomatica Spa

Guarantor

Out amt

Type

None

EUR750m

Mandatory and
optional

Fixed coupon

Floating

Equity credit

8.25% fixed (annually) until


31 March 2016

6m EUR + 505bp floating (semi-annually) S&P (50%)


thereafter. Represents a 100bp step up
(issued at 6m EUR + 405bp)

Call
Callable at par, in full only, on 31 March 2016 and semi-annually thereafter. The issuer can also redeem the bonds in
whole at par if a gross-up event occurs before 31 March 2016, and at the higher of: 1) par, or 2) the price at which
the bond's yield to call is equal to bunds + 75bp, if a tax event occurs before 31 March 2016. In each case, a call is
subject to the conditions of the replacement provision below.
Subordination
Deeply subordinated, unsecured. Junior to all but shareholders of the issuer.
Optional coupon deferral
Optional deferral at the sole discretion of the issuer. Optionally deferred interest is cumulative; within the following
five-year period, this is payable in cash at the earlier of: 1) the resumption of interest payments to the bondholders;
2) the resumption of dividend payments to holders or redemption of equity or parity/junior securities. Beyond the fiveyear period, accumulated optionally deferred interest becomes old optionally deferred interest.
Mandatory deferral
Mandatory deferral if the coverage ratio is less than or equal to 1.35x, where the coverage ratio = ( EBITDA + ESOP
cash flow - capex - taxes paid ) / interest expense. Mandatorily deferred interest and old optionally deferred interest
is cumulative and payable in cash at the earlier of: 1) seven business days after the issuer receives proceeds from
an equity sale, and 2) 10 years. While there is unpaid mandatorily deferred interest and old optionally deferred
interest, the issuer cannot redeem junior/parity securities or equity and cannot make dividend payments on
junior/parity securities (capital restriction clause). Also, in the event of the issuer's shares being suspended from
trading as a result of social/economic/political issues involving the Republic of Italy, UK, or USA, then the issuer is
not obliged to pay mandatorily deferred interest and old optionally deferred interest.
Change of control
A change of control (CoC) call event is defined as a CoC (defined as any person(s) acting in concert to acquire 50%
of the issuer's share capital or voting rights) and a consequent 1) downgrade to Ba1/BB+ or below by Moodys or
S&P, or 2) withdrawal of the corporate family rating/corporate credit rating. If this occurs before 31 March 2006, the
issuer may call the bonds at the price at which the bonds yield to call is equal to bunds + 75bp; if this occurs after,
the issue may call the bonds at par. If the issuer opts not to call the bonds, then there is a coupon step up of 500bp.

571

European Credit Research


Corporate Bond Covenants
September 2010

abc

Bond
Refunding redemption
Replacement provision stating Lottomatica's intention if it chooses to redeem the current issue is to do so using the
proceeds from: 1) equity, or 2) securities that have substantially the