A group of junk-bond managers who buy some of the riskiest debt sold on global capital markets, are pushing back against issuers’ reluctance to provide them with the full picture of their finances.
Janus Henderson, Allianz Global Investors and JPMorgan Asset Management were among 20 asset managers who presented a list of questions on Monday to some of Europe’s largest bond underwriters that prospective issuers must answer on their finances. Failure to respond could prompt investors to charge more or even walk away altogether from bond sales.
“We want them know in advance that investors will be asking these questions so management can be prepared,” said Sabrina Fox, executive adviser at the European Leveraged Finance Alliance that represents the investors.
The questions focus on issuers’ plans for disclosing earnings, their levels of indebtedness and — if they are private-equity owned — whether they plan to make acquisitions, according to ELFA.
“Investors must assume the worst when details are not disclosed,” said Clark Nicholls, a senior portfolio manager at AXA Investment Managers, which has $759 billion of assets and is a member of the ELFA group.
“When you get borrowers being selective on the information they disclose, the market isn’t a public one anymore,” he said.