Euro high yield faces new frontier with B- divi deal

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By Owen Sanderson
19 May 2020

The slowly reopening European high yield market faced another test on Tuesday, following Sappi’s decision to pull its planned issue at the end of last week. Data centre and cable network firm Cogent was raising an B3/B- rated add-on in order to pay a dividend. The company is too leveraged already to allow a dividend under its existing bond docs but is using a "temporary deleveraging" and escrow structure to work around them.

Bank of America was marketing the €215m add-on to Cogent’s existing 4.375% 2024 notes with an investor call on Tuesday and pricing due later this week.

Using debt proceeds to pay a dividend might be seen as an aggressive move when most highly leveraged firms are doing everything ...

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