Restructuring Debt Securities Under U.S. Law – Navigating the Economic Crisis in 2009

By Alexandros Aldous, Watson, Farley & Williams

During the upswing of the previous business cycle, an abundance of surplus capital led to a variety of financing opportunities such as “covenant light” bank loans and easy to price public debt instruments. Now, however, the credit crunch has affected all markets in a very powerful way, including the secondary market for debt securities. As exhibited in the accompanying chart, since March 2008, there has been a very significant decline in the value of both high-yield shipping bonds and high-yield bonds in general. Given the significant decline in secondary market prices for debt over the course of the last year, and the flat secondary debt markets, this could present an opportune time for companies with outstanding public debt to restructure their debt

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