Junk Bond Managers Join Forces to Reform Swedish Issuance Market
Junk Bond Managers Join Forces to Reform Swedish Issuance Market
(Bloomberg) -- Two of Sweden’s biggest high-yield fund managers, with combined assets of $2.5 billion, have started a new program to make sure investors know exactly what they’re buying when they move into a rebounding market for risky debt sales.
Starting this month, any prospective junk bond borrower will have to satisfactorily answer a questionnaire focused on environmental, social and governance issues to secure an investor meeting with either Carnegie Fonder or Spiltan Fonder.
The goal of the survey is for issuers to “answer a basic set of sustainability related questions in all presentation material preceding a bond issuance,” according to a presentation seen by Bloomberg News.
Spiltan’s Lars Lonnquist says “this is only the beginning of what will be needed going forward.” He also says that “many companies see the importance of working on sustainability.”
The questions cover a wide range of ESG topics, including a firm’s primary risks related to climate change, whether there’s any history of work-place accidents, and the extent to which staff receive anti-corruption training. There’s also a call for companies’ quarterly reports to match the level of detail seen in investor presentations prior to a deal’s launch.
The two investment firms are urging “market participants to get involved, please feel free to join forces,” according to the presentation.
And while Lonnquist says he’s seeing “some push back in terms of companies being taken by surprise,” the reception overall has been positive, he said.
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