Produced in partnership with Aseet Dalvi of Cleary Gottlieb Steen & Hamilton

The following Banking & Finance practice note produced in partnership with Aseet Dalvi of Cleary Gottlieb Steen & Hamilton provides comprehensive and up to date legal information covering:

  • Portability
  • What is portability?
  • Key points in high yield documentation
  • Leverage-based tests
  • Ratings-based tests
  • ‘Disguised’ portability
  • Recent trends in the high yield market
  • Portability in the leveraged loan market


This Practice Note examines portability provisions in high yield bond documentation. It looks at what is meant by portability before discussing key points in high yield documentation and portability in loan documentation. It assumes some knowledge of terminology used in the market.

For introductory information on acquisition finance together with links out to more detailed information, see Practice Note: Acquisition finance—introductory guide. For a glossary of acquisition finance terms, see: Glossary of acquisition finance terms and jargon.

What is portability?

High yield bond covenant packages typically contain provisions that provide bondholders with a put right—generally at 101% of par (plus accrued and unpaid interest)—on the occurrence of a change of control (CoC). This provides bondholders an opportunity to reconsider their investment and potentially exit from it without loss in specified circumstances in which management and ownership of the issuer is likely to have fundamentally changed.

For more information on bondholder put rights on a CoC, see the section ‘Limitation on change of control’ in Practice Note: Covenants and other key terms in the European high-yield market.

Portability refers to variations in conventional CoC provisions that began in the European high yield market in the spring of 2010 (with the Ziggo issuance) through which events that would otherwise constitute a CoC will, in certain circumstances, not trigger an offer to purchase at 101%.

There are two principal formulations:

  1. leverage-based formulations (primarily

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