Sparks fly over Marks & Spencer

While equity-holders in Marks & Spencer are rubbing their hands at the recent takeover bid by retailer Philip Green, bondholders are counting the cost. For them, the bid has revived all the familiar arguments about weak bond covenants, as Alan McNee reports

Key points

•M&S spreads blew out on the news of Philip Green’s attempted LBO, and all three rating agencies placed M&S on review for downgrade.
• There is controversy over M&S’s 2014 issue: sterling houses unsuccessfully tried to get a change-of-control clause inserted into the documentation.
• The episode typifies the debate between those that believe investors should be protected more, and those that say caveat emptor.

UK retailer Marks & Spencer (M&S) is renowned