As the European telecoms sector and its investors work through a painful restructuring, a few US law firms and boutique investment banks are being kept very busy. This is a source of irritation to the big City of London law firms that have eschewed the representation of bondholders in favour of their existing relationships with primary lenders.
As telecoms companies and other industrials grapple with the downturn, defaults have become increasingly common. Restructuring firms that can combine experience of high-yield litigation in the US with track records in Europe are finding themselves in great demand.
By the end of 2001 there was high-yield debt of around $60 billion in issue by companies with a material European presence. Martin Reeves, director of European credit research at Alliance Capital, says: "The resources needed to deal with this situation have not been required before. There was a 16% par default rate for 2001 and some predictions for 2002 are that this could rise to around 30%.