Clifford Chance

Liability management in volatile markets: to tender or repurchase in the open market?

8 April 2020

Global economic and wider conditions have resulted in severe market dislocation globally, and the international debt capital markets are no exception.

While bond issuers who are suffering from cash flow constraints have looked to liability management – and the consent solicitation process – to relieve stress on their balance sheets and their financial covenants, others have looked to opportunities brought about by the market dislocation to reconfigure their balance sheets by buying back, and thus retiring, outstanding bonds that are trading at price levels below the par value of the bonds. In particular, the demand by bond funds for liquidity in order to meet fund redemption obligations during times of economic distress serves to exacerbate the downward pressure on bond prices.

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