IFLR 1000
The Guide to the World's Leading Financial Law Firms

Talk of the town, word on the street, flavour of the month, whatever you want to call it; high-yield debt has been a subject and an area of great interest this year in the UK and across Europe. "We're phenomenally busy given the high volume of deals, there doesn't need to be any end in sight. Everyone round here is a bit tired a bit beaten down, but it's a good problem to have," says one partner and another agrees: "Demand has been robust, everyone's been overworked, it's a rising tide."

Practitioners also note that the product is being used in a wider variety of ways, refinancing, acquisition financing – often in conjunction with a credit facility. You name the deal and you can guarantee someone's going to try to use a high-yield bond as part of the package. Refinancing though remains its key use, for a simple reason as one partner explains: "It is true that that there are a shed load of companies with a shed load of debt that are going to be coming through soon and someone's going to have to deal with it."

One of the key drivers of this wider increase has been an influx of new issuers into the market, many of whom are European corporates forced to look beyond the bank finance markets due to a lack of liquidity. "We have seen a lot of corporates coming into the market, a lot of companies coming into the market which would not have looked at this market before," says one lawyer and another agrees: "A lot of new entrants to the market, corporate and private equity shops that never really did high-yield, so a lot of probity being put on experience because there's a lot of people who don't have any relying on those that do."

Another clear reason for this trend is simply a case of confidence breeding confidence, with issuers wanting to see deals completed successfully by their peers. "Bonds were always seen as a bit of a dirty product or dangerous products or a difficult product," explains one partner. "But with more corporate issuers having come to the market, there's a greater acceptance that it is doable and life goes on after the bond deal. It's become a more accepted piece of the capital structure more as it is in the US where it never had that sort of taint."

What this trend has led some to suggest is that the market will see the development and evolution of a unique European style of product to cater to this new market. "I think you'll see something which closely resembles the US model but you'll also see a very specific European model," says one partner, "The European market seemed to be a more one size fits all model up until 2009 but then we saw a change."

This process starts with more deals being done under local law. English law deals are picking up, but in truth German law governed transactions are the ones making the most headway in the wider European market.

An interesting side issue, which emerged in April was a letter from the European Buyside Forum which raised concerns about certain elements of standard transactions. The key bugbears were the distribution of voting rights on enforcement actions and fuller disclosure of intercreditor agreements. While it certainly encouraged debate, there was a sense among practitioners that it was unlikely to lead to much change. "The fact that the letter was put out there is new, but the issues are not particularly new," says one partner. "I think it's a small group of people who I know who have always been particularly aggravated about that and now they've got a bunch of people to sign on for the letter." While there were clear doubts expressed about whether the letter would have much impact, particularly in such a strong period of workflow, most lawyers did agree with the logic of some of the demands: "I think most of the disclosure is actually pretty solid as it stands, people are fed up of not having the things [intercreditor agreements], because in the last recession it was hard to get your hands on it," explains one partner. "People were making significant bets based upon where they thought the value was breaking in the capital structure and so they're such complex convoluted documents that people wanted to be able to find, or be able to support their views on where the value break would fall."

In the legal market itself there is certainly enough work to keep everyone busy at the moment and the real question was how the group of firms, predominantly the UK magic circle, outside of the traditional US operators, would approach the new market. "I think the little club that has dominated this field since the early 2000s is going to continue to be identified as the leaders but their share will decrease as everyone slowly but surely begins to catch up," says one US partner and a compatriot agrees: "The English, this is their opportunity, they still won't get the positions in the short term but it's a rising tide, the market will get larger and they are very focussed on the market right now."

"In my view its appropriate to have Latham in tier one due to the size and scale of their practice, they are out on their own." This view from one partner pretty much sums up general market opinion towards the Latham high-yield team. The fact is that in a market as thriving as the UK scene has been in the last 18 months, capacity suddenly counts for a lot. "I think they are still there to be honest," concurs another peer. "They are no better than anyone else but they have a huge bench and can cover the market like no-one else. I think they still sit at the top of the table."

With a dedicated four partner team led by Brett Cassidy and Richard Trobman, the high-yield practice at the firm is easily the biggest in London and this is reflected in the level of work the firm has carried out in the past 12 months. Cassidy and Trobman also led from the front advising on the majority of the firm's high-profile mandates.

"Unquestionably one of the market leaders in high-yield, the size of their platform and footprint sets them aside from the others. Richard is vastly experienced, Brett is creative and very gifted," says one client.

In 2010 alone the team acted on European mandates worth a combined $20.7 billion. Highlights are many, although one deal that stands out considering the current trends in the market is the firm's advice to Credit Suisse and Deutsche Bank as the underwriters of Wind Acquisition Finance's offering of senior secured notes, the largest to date by a European issuer.

The team acted for the same two banks again, this time alongside Goldman Sachs, BNP Paribas, ING and JP Morgan in regard to Dutch cable company Ziggo's issue of €1.2 billion in senior subordinated notes due in 2018.

The firm wasn't restricted to bank side representation and showed its flexibility when it advised CVC and Sunrise Communications on the issue of senior secured and straight senior notes as part of the acquisition finance acquired by CVC for the takeover of Sunrise. The deal also represented the largest LBO in Europe since the financial crisis.

"I think Latham are the leader by size of team and number of transactions, I think that's fair," says another partner. Clients also clearly saw the benefit of the teams' larger capacity: "High quality partners matched by equally high quality associates makes it a good deal all round," says one succinctly.

As you would expect from a market leading practice, the firm's services do not come cheap, but client's accept that you get what you pay for: "They command high fees because they are good and high class and you get what you pay for," says one, "Their business delivers." Others point out that clients get more than just advice: "Proactive, they give education training classes, updates on developments in the market, active engagement in conferences, recommendations to clients," says another. "The partner relationship is very important, in a highly leveraged risky situations you have to have what I call adult supervision you need the confidence of someone with high experience."

With high-yield now a key part of the European financing landscape, mandates in these matters have been plentiful. Last year Cassidy and Trobman acted for Barclays Capital and JPMorgan over the €740 million secured debt offering by Ineos as part of its senior debt refinancing.

"I think Latham are the leader by size of team and number of transactions, I think that's fair," says another partner.

The Cahill high-yield team in London is built around the talents of partner James 'Jim' Robinson. "The only differentiate is depth, you know Cahill is one man but Jim really knows his stuff," says one partner.

The issue of bench strength was mentioned by the market as a factor that would slightly impede the firm's progress. "Jim Robinson at Cahill is very good but the issue is just capacity, they have six people in London but it must be hard to keep up with the volume," says another partner. However such comments can in truth be levelled against a number of firms in the market, with arguably only Latham being able to draw on a deep well in London itself. To take full advantage of the vibrant market, peers suggest that the firm's UK banking team may also require additional bodies, but in terms of pure quality there was no doubt: "Cahill are very high quality, extremely good," says one.

In the LBO market, a clear highlight last year saw Robinson, James Clark, Jonathan Schaffzin and Stuart Downing advise among others Citigroup Global Markets, Bank of America Securities, BarCap and RBC Capital Markets on the issue by Pinafore of $1.15 billion of senior secured notes due 2018 for the partial finance of the acquisition of Tomkins by Onex and the Canada Pension Plan Investment Board. In a similar deal in October 2010, Clark, Robinson and Anthony Tama advised Citigroup Global Markets, Credit Suisse Securities and JPMorgan Securities on a $1.1 billion issuance by Ardagh Packaging Finance as part of the funding of Ardagh Glass Group's acquisition of Impress Coöperatieve.

With refinancing work flooding the market the team took full advantage acting for Matalan Finance on a £250 million issue of senior secured notes in April 2011. On the other side it acted for bookrunners on the $650 million 5.75% notes and the €500 million 5.25% notes issues by FMC Finance and Fresnius Medical Care US Finance.

Robinson and Tama also advised JPMorgan Securities, Banca IMI, BNP Paribas, Deutsche Bank and RBS as bookrunners on SEAT Pagine Gialle's €200 million 10.5% issue of senior secured notes in October 2010.

Like its US contemporaries in tier two Cravath is viewed in the London market as a high quality team whose only handicap is the depth of its London operation. "Cravath are a great team but rather stretched," says one peer.

Philip Boeckman leads the team and is part of a small group of senior New York high-yield lawyers in London who have been in the market for a considerable time and are seen as an experienced and safe pair of hands. "Philip is the leading high-yield partner in London," says one client. "It was a first class service from Cravath. One of the leading underwriter, high-yield firms in London, quality partner attention, extremely well trained supervision and a high standard of lawyers." Another client agrees: "Philip's particularly good, they are market leaders in new structures and new transactions. Very well recognised in the market."

The team's past experience includes the landmark Brake Bros transaction in 2002-3, which has been quoted recently as an example of buyside demands in light of the issues raised by the European Leveraged Finance Buyside Forum letter.

Last year the firm had a strong pipeline of mandates acting for initial purchasers. One example saw the team act for the purchasers led by Deutsche and BNP Paribas on the SFr300 million (€278.2 million), €371 million and €505 million tranches of a debt offering by Sunrise Communications International and its holding company. The team also advised the holding company on a further €56 million issuance following its acquisition by CVC. The latter formed part of one of Europe's largest LBO's since the financial crash.

A similar deal saw Boeckman and Alyssa Caples act for Picard Bondco on a €300 million debt offering and Picard PIKco on a €38 million private placement.

With European issuers a new and novel part of the market, Cravath took advantage advising Morgan Stanley and RBS on the English law aspects of BAA's (the holding company of Gatwick and Stansted airports) £325 million debt offering on the LSE.

Similar work arose from JPMorgan and Credit Suisse who the team advised on the largest Sterling denominated high-yield issue to date, an offering of £520 million by insurance firm Towergate. Completed in January 2011, the deal came after the company had been forced to abandon an intitial issue in 2010 following the closure of the market.

Restructuring utilising high-yield has been a big source of work and in this area Cravath again through Boeckman acted for Deutsche, Citi, Credit Suisse, Goldman, JPMorgan and UniCredit on Hapag-Lloyd's €480 million and $250 million dual issue which formed part of the shipping companies restructuring.

"They're well organised, they are thoughtful and well prepared," says one peer.

Shearman's practice took a major hit in April 2011 with the departure of key partner Ward McKimm to Kirkland & Ellis. With capacity such a defining feature of the UK market at the moment peers pointed out that this will have an impact: "If you look at Shearman they have lost Ward McKimm and made up some associates but they don't have that depth anymore," says one partner.

The team is now led by the popular Jacques McChesney and the firm has also made up promising associate Apostolos Gkoutzinis to partner in recent months. "Shearman is the interesting one," says one peer, "they only really have Jacques there now and they have made up a partner which has been done in a slightly reactionary way in my opinion, it will be interesting to see how that plays out."

What the firm can fall back on is a strong London banking team and with the market looking for the holy trinity of bank, bond and high-yield expertise from its advisors, now the firm can build from a position of strength on the banking side. "Jacques is still a good lawyer," says another peer. "They'll come back and do alright, their bank practice is wonderful."

One client of McChesney pointed out that the team was in good hands: "I've done many transactions, strong working relationship, I can call them up and ask questions and explore topics with them whenever I want. The partner relationship is critical."

Deal-wise, the firm is still winning good mandates including advice to Advent International on two batches of senior secured notes valued at £425 million and £175 million respectively. The issue formed part of the financing of the acquisition of The Priory Group from RBS. Utilising its connections, the team also acted for one of Advent's portfolio companies Oxea Finance & Cy on multi-currency offerings of €300 million and $260 million in senior secured notes, the deal saw the team working in conjunction with its banking team who advised Oxia on an additional revolving credit facility.

Another acquisition linked deal saw departed partner Ward McKimm work alongside Gkoutzinis acting for Ardagh Packaging Finance on two dual tranche notes issues, one valued at €1.1 billion and one at $800 million. These funds formed part of the financing for the Ardagh Group's €1.7 billion acquisition of Impress Coöperatieve with a certain part being used for the refinancing of the group itself. The team also acted for Ardagh Glass holdings on a €180 million 8.75% senior notes issue used for a refinancing of its high-yield bonds.

Finally McChesney and his team acted for the initial purchasers including Barclays, HSBC and Standard Chartered on MBPS Finance's $320 million notes offering in November 2010, the first ever issue by a Gulf company.

The high-yield practice at Simpson Thacher has the benefit of being able to draw on the firm's immensely strong private equity clientele. While this can lead to the firm picking up some impressive mandates, the result is that the firm tends to work on deals as and when clients demand it: "Simpson's practice continues to be focussed around a couple of high profile financial sponsors, notably KKR and Blackstone so their cases tend to be a bit more episodic," explains one peer and another agrees: "Simpson is great, I'm surprised they don't get more work, they have their private equity clients but they don't do too many deals."

The London team was enhanced in 2011 with the promotion of Alvaro Membrillera who will work alongside partners Nick Shaw and Greg Conway.

Shaw was kept busy last year on various notes offerings by Virgin Media Secured Finance. In December 2010, he acted for JPMorgan and Goldman Sachs on Virgin Media's issue of $1 billion in 6.5% senior secured notes and £875 million in 7% notes. In March 2011, both banks called in Simpson again to advise them along with BNP Paribas, Deutsche Bank, HSBC, RBS and UBS on a Rule144A/Reg S $500 million offering of 5.25% senior secured notes and £650 million in 5.5% notes.

Conway meanwhile acted for Deutsche Bank London in an offering of €400 million of Rule 144A/RegS 8.75% notes by gaming company Cirsa Funding.

Both partners combined in October 2010 advising the initial purchasers led by JPMorgan on a Rule144A/Reg S offering of €170 million in 9% senior secured notes due 2017 by media company CET21. The firm's banking team also secured a €60 million credit revolving credit facility for the company.

Like many of its UK peers, the perception exists that Allen & Overy's High-yield offering is very much based around one key partner. In this case Kevin Muzilla. "I think they've had a number of prints where they've been fed from the company side and that's the one where it really is a one man band," says one rival partner.

There are signs however that the firm is gaining traction and will no doubt look to boost numbers if the work continues to be prevalent in the market. "Allen & Overy took Kevin Muzilla from Milbank and whatever his reasons for leaving, he was at least an established player and I think that's helped them and they've done some deals," says another peer.

In 2010 the firm took on Jacob Minas as of counsel from Cahill Gordon & Reindell in New York as it looks to increase its capacity.

The team has managed to achieve a good balance between bank and company side mandates. In the former, Muzilla had a hand in two of the most prominent, acting for Goldman Sachs and Citi on an issue of €500 million in senior notes by Alcatel Lucent and JPMorgan and Trokia Dialog on a $200 million issuance of 10% notes by Avangard.

On the company side, Muzilla was again involved acting for Cable & Wireless on a $500 million issuance and Manchester United on two issues of senior secured notes, one valued at $425 million and one at £250 million.

Another highlight, which draws the eye, saw a team consisting of Muzilla and Boyan Wells acting on the establishment of the first ever high-yield EMTN programme. Acting for Deutsche Bank and Morgan Stanley, the programme, initiated by the Eurasian Natural Resources Corporation, is valued at $3 billion.

The Linklaters high-yield department is led by co-heads Alex Naidenov and Mark Hageman, with the latter joining the department in September 2010 from Cravath Swaine & Moore.

The market perception of Links is that of all the UK firms, it is the one that has the best of the early running in the high-yield area. "Linklaters have been the most successful, their hire of Hageman is a very good hire because he does have a depth of experience and it goes from being a one man band to decent operation, how they integrate with the rest of the firm is their big challenge," says one peer. Others pointed out that rather than experiencing issues of integration, the team would instead benefit from the firm's traditional corporate and banking strengths. "We have been doing a lot of work with Links and its helpful because they have a strong bank side practice and high-yield where the people are good people," says one partner and another agrees: "Links has two American partners and have taken a few clients and they will take the work that is given to them."

This broad capability was highlighted when the team acted for Hertz on the €620 million issuance of senior secured notes as part of a wider financing which also included bank and securitisation elements.

On another issuer side mandate the team acted for Care UK on a £250 million issuance of senior secured notes as part of the financing for the take private of the company. The team also acted for the Cirsa Gaming Corporation on the issue of €400 million in 8.75% senior secured notes.

The state of the Pik financing market has received mixed reports, but Linklaters completed two deals in this area last year. In one the team acted for the arrangers including Nordea Bank, DnB Bank and Nykredit Bank on the SKr12 billion ($1.7 billion) financing including a €200 million Pik facility for the acquisition of the Dometic Group. This deal, led by Alex Naidenov in conjunction with the firm's Swedish office. Naidenov also acted for Deutsche Bank as the underwriter on the £176 million in second lien notes offered by Moto Finance (a subsidiary of the Moto Group) in conjunction with bank financing.

The White & Case high-yield team is led by the department's three key partners: Rob Mathews, Colin Chang and David Becker. The firm is still best known for its work in emerging markets, in particular Turkey, Kazakhstan and across the CEE (Central & Eastern Europe) region.

A strong finance offering is another key element for any successful high-yield practice and the firm has successfully fought back after key members of its banking team departed two years ago.

One deal which highlighted the firm's geographical strengths saw it work for Turkish construction company Yuksel Insaat on a $200 million issue of 9.5% senior notes. This was the first New York law governed high-yield issue by a Turkish company in 15 years.

Another emerging markets deal saw Colin Chang act for the holding company Kazakh oil and gas company Zhaikmunai on the issuance of senior notes by its subsidiary Zhaikmunai Finance, the aim of which is to repay existing senior secured facilities.

With high-yield being used for a wide variety of uses in the current market, the team showed its flexibility by acting for Wind Acquisition Finance and Italian telecoms company Wind Telecomunicazioni on their €6.6 billion refinancing including a bond offering of €2.7 billion dual tranche senior secured bonds.

Finally another interesting deal and a first in the market, saw Rob Matthews lead a team acting for the Dar Al-Arkan Real Estate Development Company in the Saudi Arabia in regard to a $450 million offering of Reg S/Rule 144A notes on the LSE. Notable for being the first ever high-yield issue of Islamic bonds, the deal saw the bonds issued utilising a sukuk al-wakala (Islamic bond with underlying asset) structure through a Cayman SPV (special purpose vehicle).

Of all the UK firm's attempting to take a slice of the high-yield market, Clifford Chance efforts were the ones greeted with the most doubt by peers. "I would have thought before the recession that they would be best placed, but I just don't see them anywhere," says one and another agrees: "CC would be the tail of the pack. They are no-where to be found which is just inexplicable."

This is of course only in comparison to its magic circle peers. The firm would still be considered ahead of the rest of the domestic market and many of the other smaller US offerings, however there was a sense that greater capacity is needed to bridge the gap to the market leaders.

One of the firm's largest deals last year saw it act for broadband company ONO on a €700 million Rule 144A/Reg S offering of 8.875% notes by a special purpose vehicle (SPV). The deal was led by John Connolly and Michael Dakin.

Like its magic circle peers, Freshfields Bruckhaus Deringer has been making a concerted attempt to increase its high-yield capacity this year. In September 2010 Gil Strauss joined the firm as a partner from Simpson Thacher and a few months later in March 2011 Simone Bono followed suit, moving across from Simpson's New York office. "Freshfields is building it up there [in high-yield]," says one peer. "Gil Strauss has the possibility to build it up there." Because of the recent nature of the hires though, the market is still waiting to see what the true impact will be. "Gil came from Simpson, he's a good guy and a good lawyer, I'm not sure how clients are reacting with him, he is very commercial," says one rival.

Clients pointed in particular to Strauss' ability to adapt to a changing market, as one explains: "There's so many cycles in this area, he has the ability to do this. Very knowledgeable of the business area he knows who to go to for disclosures and business matters." Another adds: "We have a great relationship, that is why we feel valued as client. The link with Freshfields is based on the relationship I have with Strauss."

Because of its German strength, the team is also well set to benefit from the recent rise in German law governed high-yield transactions. "Freshfields, they get some work out of Germany, but they don't have the 15 year veteran, but I would rank them head and shoulders above the others." This was demonstrated when the team acted for Continental on the issuance of 8.5% senior secured notes due in 2015 by Conti-Gummi Finance under the new German bond market. This was followed by further issuances amounting to €2.25 billion listed on the Frankfurt stock exchange.

One deal highlight which involved Strauss saw the team acting for Goldman Sachs, Deutsche Bank and the KKR Group as the underwriters on a high-yield offering by the Kion Group, consisting of and issue of €325 million in senior secured fixed rate notes and €175 million in floating rate notes.

Head of the debt capital markets group, Sarah Murphy was also kept busy on high-yield mandates last year, acting for the issuer in all cases. In one example she led a team acting for BAA (SH), the holding company of the owner of Heathrow and Stansted airports, on its £325 million issue of 7.125% notes for the refinancing of existing debt facilities.

Murphy also acted for Ukrainian agro-industrial company MHP on a $250 million exchange offer for its existing high-yield bonds and a new $330 million issuance.

Kirkland & Ellis made a substantial hire this year taking high-profile partner Ward McKimm from fellow US firm Shearman & Sterling. "Kirkland & Ellis, they have been needing to fill that space for about ten years, that's the one thing that might be changing for them," says one partner. "I would say they seem to be serious. The sweet spot for high yield is to have private equity, acquisition finance people finance people, once you've brought in those you are on your way."

The move was generally seen as a positive one for both the partner and the firm, although there was a feeling that McKimm would have adapt to working with a private equity dominated client base. "I think Ward is a very very good lawyer, the one challenge he will experience is how much he will continue to provide underwriter side mandates, because Kirkland are very focused on private equity. I think we'll see more of Ward McKimm on the issuer side," says one US high-yield partner and another agrees. "Ward will continue to get work from Citibank and those guys will get stuff from Bain. I don't know if they're [private equity houses] as accustomed to working with the bond guys, which will be an interesting dynamic."

In a similar vein, others pointed out the differences between the support staff and focus of Shearman and Kirkland, suggesting that the new arrival would need to adapt to working with a smaller team. "I would assume that Shearman has a bigger base of US associates to work on the deal there as opposed to Kirkland which, although a US firm, doesn't have the deep securities and capital markets practice that Shearman has," says another commentator.

Having lost Kevin Muzilla to Allen & Overy a couple of years back, Milbank Tweed Hadley & McCloy has had to partly rebuild its London practice in high-yield and another step down this path was taken this year with the hire of Peter Schwartz from Weil Gotshal.

This was seen in the market as a progressive move for the firm although the jury was still out as to whether it would allow the US firm to claw back market share.

Skadden Arps Slate Meagher & Flom in the eyes of a number of practitioners in the market suffers slightly from a lack of a clear figurehead. James Healy and Rick Ely lead the team, but their time is split between high-yield and straight debt work. To move to the next level, it was suggested, Skadden would need a dedicated partner.

This is not to say that the firm has not won a decent number of mandates though. On the company side the team acted for Italian publisher Seat Pagine Gialle on two separate high-yield issues, one a €550 million offering of 10.5% notes and the other a €200 million offering of 10.5% notes. The team also acted for shipping and drilling service provider Stena on a €200 million offering of 7.875% notes.

On the bank side, the team also received work from Goldman Sachs, Morgan Securities and Morgan Stanley as bookrunners on a €475 million offering by New World Resources of 7.875% senior notes due in 2018.