Worst, Better, Best: Supermajority Provisions in European High Yield Bonds
Shoshanna Harrow, J.D. - Senior Covenant Analyst, Covenant Review
30 September 2025
Insights into European high yield supermajority provisions, sacred rights vulnerabilities, subordination mechanics, collateral release pathways, and best-practice protections, including:
Sacred rights and consent thresholds:聽Why European high yield bonds typically require only 90% (or 75% for Italian issuers) consent for fundamental changes鈥攆ar lower than US high yield’s unanimous consent requirement鈥攃reating risks for minority holders.
Subordination and priming mechanics:聽How most European bonds omit payment subordination, lien priority changes, and collateral waterfall amendments from sacred rights lists, enabling issuers to prime existing bondholders with simple majority consent.
Collateral and guarantee release risks:聽Why “all or substantially all” thresholds and lower consent requirements (75% vs 90%) make it easier to strip away credit support, as demonstrated by Swissport’s 鈧�380 million super senior facility.
Grace period and class voting loopholes:聽How issuers like Food Delivery Brands and Codere exploit undefined grace period changes and aggregate series voting to disadvantage minority holders without triggering supermajority protections.
Best-practice blockers and anti-LMT provisions:聽Which covenant protections鈥攊ncluding Payment for Consents requirements, explicit anti-subordination language, and liability management transaction blockers鈥攑rovide the strongest defense against aggressive covenant amendments.
The Bottom Line 鈩笍
鈥� Subscribers often ask for suggestions as to how a weak covenant provision could be improved.
鈥� In our 鈥淲orst, Better, Best鈥� series, we review provisions from recent European high yield bonds and leveraged loans, explaining the concerns raised by the 鈥淲orst鈥� category and the heightened protection provided by those in the 鈥淏etter鈥� and 鈥淏est鈥� categories.
鈥� Investors can refer to these examples when negotiating for improvements in covenant terms in primary deals.
鈥� In this report, we consider supermajority consent provisions in European high yield bonds.
Overview
At Covenant Review, identifying weaknesses in high yield bond and leveraged loan covenants is our bread and butter.Once we鈥檝e pointed out risks in relation to a particular provision, subscribers often ask us for suggestions as to how it could be improved, ideally (given the power of precedent) supported by examples of better wording included in other deals.
In our 鈥淲orst, Better, Best鈥� series, we provide actionable intelligence using examples of key covenant provisions from recent European high yield bonds and leveraged loans, explaining the drafting deficiencies of those in the 鈥淲orst鈥� category and the heightened protection provided by samples in the 鈥淏etter鈥� and 鈥淏est鈥� categories, which investors can refer to when negotiating for improvements in covenant terms in primary deals.
In this installment, we consider supermajority consent provisions in European high yield bonds.
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