Group of 26 grinds to a halt

The proposals from the Group of 26 fund managers calling for improved covenants were supposed to herald a new era of protection for bondholders. But nearly two years later, the impetus for change seems to have stalled. Laurence Neville reports

More than a year and a half after the publication of the Group of 26 proposals to reform the euro and sterling credit markets, the context of the discussion has been dramatically changed by the leveraged buyout (LBO) of Danish cleaning company ISS, which all too painfully demonstrated the impact of event risk on the price of bonds without adequate covenant protection. But while there is nothing like losing money to focus the mind, the parameters of the debate appear to be changing as