Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

More pathways

Book a demo

Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

Pricing

Ready to get started?

Featured Pathways

More pathways

Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

More pathways

Book a demo

Pricing

Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

Book a demo

Pricing

Ready to get started?

Book a demo

Pricing

Ready to get started?

Liability Management in Practice

Liability Management in Practice

Sushanth Papireddy

15 years: Liability Management

In this video, Sushanth covers the actual workings of each of the liability management transactions. He then covers the economic risks and rewards of participating in these transactions and explains what drives bondholder participation in a liability management operation.

In this video, Sushanth covers the actual workings of each of the liability management transactions. He then covers the economic risks and rewards of participating in these transactions and explains what drives bondholder participation in a liability management operation.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Liability Management in Practice

6 mins 11 secs

Key learning objectives:

  • Understand the mechanics of bondholder consent solicitations, tender offers, and exchange offers

  • Outline the economic incentives and risks that drive bondholder participation in LM transactions

Overview:

LM mechanics for bondholder consent solicitations, tender offers, and exchange offers are governed by the terms of the bonds and associated agreements. Incentives and risks drive bondholder participation in these transactions, such as consent fees for solicitations and premiums to market price for tender offers. Non-participation risks losing out on these incentives, while the reduced liquidity from buying back bonds could discourage participation. When structuring LM exercises, companies must be careful not to use overly coercive structures to avoid pushback from investors and reputational risk. Precedent transactions can provide a guide to market conventions and outcomes.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Summary

What are the mechanics involved in the different types of LM transactions?

The mechanics of different types of LM transactions involve various procedures and protocols. In consent solicitations, the terms of the bonds and agreements dictate the process for seeking noteholder consent. Bondholders are incentivised to vote in favor through the payment of fees. 

Tender offers involve a public announcement by the company regarding its intention to buy back certain bonds, with buyback levels set at a premium to market levels prior to the LM announcement. The company can set a priority order for acceptance, and legal counsel and a tender agent must be engaged to produce the documentation and facilitate settlement. 

Exchange offers are similar to tender offers, but instead of cash, bondholders receive new bonds with different pricing terms and specifications.

What drives bondholder participation in an LM exercise?

Bondholder participation in liability management (LM) exercises is primarily driven by economic incentives and risks associated with non-participation. 

Consent fees and premiums offered in tender offers are common incentives, while the potential loss of consent fees or reduced liquidity can act as disincentives for non-participation. 

Bondholder composition also influences take-up, with investors who prefer to hold bonds to maturity being less likely to participate in tender offers. 

Careful consideration of incentives and disincentives is essential, as overly coercive structures can lead to investor pushback and reputational risk for the company. Precedent transactions can provide guidance on market conventions and outcomes of LM exercises.

Subscribe to watch

Access this and all of the content on our platform by signing up for a 7-day free trial.

Sushanth Papireddy

Sushanth Papireddy

Sushant Papireddy is an engineer by background and currently works in the EMEA Liability Management practice at an investment bank. He has been in investment banking since 12 years ago and has worked in different areas of Debt Capital Markets. He moved to his current role in 2018.

There are no available Videos from "Sushanth Papireddy"