By Mary Mullally
Shearman & Sterling has scored a victory over its UK rivals by advising Morgan Grenfell on all aspects of the £160m junk bond issued by aluminium group Luxfer Holdings.
The high-yield bond – issued on 9 April – is the largest ever bond of its kind issued by a European industrial company.
It is also being heralded by capital markets lawyers as a sign that the European junk bond market is reviving.
John Wilson led a team of five lawyers at Shearman & Sterling's London office that advised lead bank Morgan Grenfell on both the UK and US aspects of the deal.
A team of advisers at niche commercial practice Dickson Minto, led by senior partner Alastair Dickson, advised the firm's existing client Luxfer Holdings on the UK aspects of the deal.
Glen Scarcliffe at Cleary Gottlieb Steen & Hamilton's London office headed up the team advising Luxfer on the bond's US and European aspects.
High-yield bonds have been popular in the US for a number of years, but although they have been used in the UK since the early 1990s the market took a dip last year.
Wilson at Shearman & Sterling said: "It is a very encouraging transaction. There are a number of other UK high-yield bond issues in the works, but it is helpful to have completed this on successful terms.
"It will give momentum to the market which has suffered since the autumn."
He said US firms had an advantage over UK rivals because even when junk bonds are governed by UK law the disclosure document must comply with US standards and terms are based on the US model.
But he added: "High-yield bond issues are here to stay. There is no question about that and there will be more involvement of UK lawyers."
Peter Voisey, a partner in Lovell White Durrant's capital markets group, said his firm was currently advising on a number of high-yield bond issues.
He said: "You actually have a bit of a skirmish between the US and the UK firms. The first corporate clients to deal in high-yield bonds were in 1994-95 when it was all pretty much US dominated. With the onset of the euro and the renaissance of the corporate bond market, the UK firms will be better placed to advise in the future."
Luxfer Holdings, formerly British Aluminium, was created after the buy-out of British Alcan in 1996. Dickson Minto advised on the buy-out and was retained as Luxfer's UK corporate law firm following the deal's completion.