Consent solicitation

Securities - debt - bonds - bond indenture

A consent solicitation is a formal offer by the issuer of a security to change the terms of the security agreement.

For example, a bond issuer might ask bondholders if the terms of a LIBOR-linked bond indenture may be changed, in order to transition to another appropriate benchmark rate.

Consent solicitations are necessary, because security agreements need mutual consent in order for them to be changed.

Transitioning LIBOR-linked bonds

"The key message for issuers is that they should now be actively transitioning their outstanding LIBOR-linked bonds through consent solicitations or other methods, and clearly communicating their plans to their investors, and in a timely manner.

Investment managers are aware that some issuers have been reluctant to launch proposals for fear of not gathering sufficient support, and would like to make it clear that investors are fully supportive of the transition process.

To this end, the IA's report also includes a list of the key features LIBOR-transition consent solicitations should have in order to maximise the chance of success - these features include strong engagement, awareness of existing regulator and industry body announcements and recommendations, and a clear focus on LIBOR transition as opposed to other matters."

Hugo Gordon, Policy Specialist, Capital Markets, from The Investment Association - ACT guest blog - 15 July 2021

See also

• Benchmark
• Bond
• Bondholder
• Bond indenture
• LIBOR
• Risk-free rates
• Security
• Solicited rating
• The Investment Association (IA)
• Tough legacy
• Transition