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New Guidance Issued for High Yield SLBs

The European Leveraged Finance Association (ELFA) and International Capital Market Association (ICMA) have partnered to create guidance for high yield sustainability-linked bonds (SLBs). The guidance is designed to address the specific needs of the sub-investment grade bond market in respect of these core components where bond characteristics or market practice depart from the investment grade bond market. It sets out ten recommendations addressing specific characteristics of high yield bonds such as redemption provisions, covenant provisions, generally shorter tenor and higher representation of private companies, which has disclosure and reporting implications. Sabrina Fox, CEO at ELFA, said: “High yield bonds as an asset class contain unique features warranting independent consideration and market guidance. Whilst the SLBPs should be applied to the asset class, this resource has been developed to provide recommendations to enhance the impact and effectiveness of high yield SLBs.” High yield SLBs are not an asset class of their own, but rather are high yield bonds to which the SLB label has been applied.

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