Monday, December 17, 2007
A recently formed group of debt investors called the Credit Roundtable will release a white paper today calling for stronger protections in bond contracts. The proposals include a "change in control put" that would allow the bondholder to sell the bonds back to the company in the event the company is taken over and "step-up coupon provisions" that would compel issuers to pay higher interest if ratings are downgraded. In 2007 about 30 companies had their credit ratings cut from investment grade to junk, many as a result of leveraged buyouts or restructurings. WSJ, Investor Group Seeks Bond Protections.