Borrowers awards 2004: Best borrowers adapt to investor worries

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WHEN 26 UK and European institutional investors put together a working paper calling for improved standards in the euro and sterling credit markets, it attracted plenty of attention. JPMorgan broadened the debate, organizing a seminar in the House of Commons in November, inviting the signatories to the paper, plus some 15 buy-side firms and representatives from rating agencies, the International Primary Markets Association (Ipma) and other banks.

Then things went quiet.

There was little to suggest that the working paper recommendations – which ranged from establishing minimum covenants for high-grade issuers to improved documentation standards to better disclosure and liquidity provision by banks – would be enforced.

Ipma's market practices committee decided it was not its place to interfere with investor issues. The Association of Corporate Treasurers came out with a lukewarm response in December and bankers were broadly non-committal. In a primary market where demand outstripped supply, they suggested the timing of the working paper could not have been worse. There was no pressure on issuers to enforce the seven key points raised, plenty of European underwriters were prepared to work with issuers however lax their standards, and investors were desperate to buy bonds.