January 2, 2008

Renewal Time: Accept No Substitutes!

Since all our web site memberships and print publication subscriptions are on a calendar year basis, it is past time to renew. The grace period for our site memberships will expire soon – go to our “Renewal Center” today to renew online. Here is a PDF that is a universal order form with the 2008 prices for all of our publications and web sites.

White Paper: Enhanced Covenants for Investment Grade Bonds and No Plain English Disclosure

Recently, a group of more than 50 fixed income investment managers – under the umbrella of “The Credit Roundtable” proposed a set of model covenants for investment grade bonds in a White Paper. The proposed model covenants address perceived shortcomings in current protections in investment grade bond deals which, in the view of the investment managers, have eroded over time. In addition, the White Paper calls for “verbatim disclosure of indenture provisions in offering documents” and explicitly rejects “plain English” descriptions of covenants. I doubt the SEC is gonna like that. We have posted memos analyzing the White Paper (and the White Paper itself) in our “Debt Financings” Practice Area.

The Downsizing of the FASB

A few weeks ago, I blogged about the proposed FASB reorg. This article discusses the proposed downsizing of the FASB. Lynn Turner notes: One thing to bear in mind is that Ed Trott left the FASB in June of 2007 before his term was over. Now it appears that Mike Crooch is walking away two years early before the end of his term is due to run out in 2010. While members have infrequently left before their terms were over in the past, I don’t recall in the history of the FASB where – in consecutive years – Board members walked away like this.

It raises a serious question as to why they are leaving; whether or not there is a problem with the health of the organization; whether it is for personal reasons or whether it is something else that is driving these departures. In addition, I understand the current investor representative who is serving out a term of the prior investor representative, who did not complete his term, has been asked by the Chair not to re-apply. This is resulting in a turnover of a majority of the Board members between June 30, 2007 and June 30, 2008. These typically are not signs indicative of an organization where all is well.

– Broc Romanek