Many investment grade bonds and most high yield bonds will include change of control put rights, giving bondholders the right to sell their bonds back to the issuer should a change of control occur. As the price at which bonds are sold back to the issuer under the change of control put right is generally fixed (often at 100 or 101% of par), in economic periods when interest rate rises have resulted in depressed secondary market bond prices, businesses considering acquiring companies that have issued bonds with a change of control put option are likely to find that investors are very likely to exercise such put rights if available to them.

The Dentons DCM team presents a Quick Guide to Change of Control Put Options to explain how a change of control is defined, as well as common variations to the triggers for change of control put options in bonds issued in the UK and European market.

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