Divisions within Afme reached a peak early last year, with some buy-side firms calling for the trade body to do more to preserve covenant protections in high yield bond offerings. Certain investors had been sending Afme open letters asking for firmer statements on market practice, starting as early as 2015; while in 2018, Afme began charging investors for membership — which led to some exits from the trade group.
Elfa started life early in 2019, as a separate investor-only body for investors affiliated to Afme — and benefiting from organisational support — with a six month trial period to see how the arrangement would work.
Investors joining Elfa would automatically be Afme members if they so wished, while Elfa, led by former Covenant Review head Sabrina Fox, would use office space and equipment provided by Afme.
In the six months since launch, however, Elfa has gone from strength to strength, signing up new investor members, launching a series of seminars on covenant protections and restructuring, and preparing a questionnaire that investors can use to quiz banks and issuers during roadshow meetings.
The affiliation between Elfa and Afme will end on July 1.
“The mutual decision was taken by the two groups following the conclusion of a six month trial period, so that both organisations can continue serving the interests of their respective members, while still working together for the benefit of the whole market,” according to a joint announcement circulated on Wednesday.
Fox said: “Elfa is grateful to Afme for its support over the last six months. The platform they provided to us was essential to our success and momentum. As trade associations, we represent different constituencies with unique perspectives. Working together as independent entities will enhance our ability to represent our respective members, and to collaborate with each other. Our intention is to continue to work closely with Afme as both parties act to support the growth and sustainability of the European leveraged finance market.”