Investors are campaigning for private companies to make theirfinancial information more available in a push for greatertransparency in Europe's growing high-yield bond market.

The Association for Financial Markets in Europe sent a list ofcompanies to bond arrangers on behalf of a group of investors in aneffort to spur debate about corporate disclosure, said GarySimmons, director of AFME's high-yield division. The document namesmore than 75 borrowers they deem too protective of theirdata, with the aim of establishing standardized reporting,according to four people familiar with the matter.

The companies control access to their information by keepingtheir earnings behind password protection, requiring registrationor only emailing their data to stakeholders, said thepeople, who asked not to be identified because discussions areprivate. Demand for better disclosure is intensifying as firmsraise money more frequently in the junk bond market, with issuanceswelling to a record 72 billion euros last year.

“Investors are beholden to the individual policies of companiesin terms of how much visibility and access they provide,” said MarkChapman, a senior analyst at CreditSights Inc. in London. “Iunderstand why some companies aren't used to transparency beingtheir top priority, but it's in their interest.”

Issuance jumped by 31 percent in 2014 and has surpassed 50billion euros this year as companies switch from bank financingfollowing a decline in bond borrowing costs. Bond sales canlead to hundreds of stakeholders, whereas loans involve only ahandful of lenders.

“They're used to having relationship banks where a small numberof people are involved, and they can control the flow ofinformation to a small group,” Chapman said.

Information Control

German retailer Takko, British carmaker Aston Martin and Spanishtheme park operator PortAventura are among the companies listed,three of the people said. The companies control access to theirinformation by asking bondholders to register to see financialresults stored on password-protected sections of theirwebsites.

“PortAventura is in a constant dialogue with its stakeholdersand has not had any requests for more financial information thanalready available, nor has it had any complaints from bondholdersabout its reporting transparency,” Tarragona-based PortAventurasaid in an e-mailed response to questions. “We have never changedthe way we report or the detail of our financial statements becauseso far our bondholders have been happy with it, however, if arequest would arrive we would be happy to review it.”

Spokeswomen for Aston Martin and Takko declined to comment onthe companies' financial reporting. Bloomberg News' requests lastweek for access to Aston Martin and PortAventura websites are stillpending approval. Takko rejected the request.

One of the proposals from the group is a centralized websitewhere information for all issuers could be accessed with onepassword, the people said. AFME plans to hold a meeting by the endof the year between investors, bankers and lawyers to discussdisclosure, Simmons said.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and DeutscheBank AG are among banks on AFME's high-yield board. Representativesof Goldman, Deutsche Bank and JPMorgan declined to comment onwhether they'd received the document.

“The sell side has seen the list and it should help discussionsfor more standardized reporting,” said Simmons. “This is part of awider effort to improve the market. Both the buy side and sell sideare committed to continuing discussions and jointly puttingpractices into place that would benefit the market as a whole.”

Most European high-yield bonds trade on the Irish GlobalExchange Market or Luxembourg Euro Multilateral Trading Facility.These platforms are governed by national rules and fall outsideEuropean Union law that requires public reporting, according toDavid Cliffe, a Paris-based spokesman for the European Securities& Markets Authority, or ESMA.

SEC Rules

The exchanges' limited reporting requirements mean the market isgoverned by individual bond contracts rather than one mainregulator, said Adam Farlow, a partner at law firm Baker &McKenzie in London who has advised high-yield borrowers in Europeand the U.S. The indentures govern how often and the extent towhich a company reports, he said.

“There is a soft standard in Europe where companies shouldreport quarterly and have robust disclosure, but it's been watereddown substantially,” he said. “Public financial reporting meansthat not only do bondholders get what they need, but everyone is ona level playing field to trade.”

Even in the U.S., where the Securities & ExchangeCommission's Edgar public filing system houses more than 20million company statements, it's getting easier for privateborrowers to keep their earnings private. Companiesare selling bonds known as “144a for life” that don'thave to be publicly registered and are exempt from minimum SECfinancial disclosure and investor protections.

European high-yield investors appealed to banks to improvemarket standards earlier this year. AFME represented 21 firmsincluding AllianceBernstein LP and Schroders Plc in a letter ofconcern in February calling for more disclosure.

Heckler & Koch GmbH is also included on the list ofcompanies, according to the people. The Oberndorf-basedgunmaker sends its earnings to bondholders through the notes'trustee, the company said in an emailed statement.

“We believe that Heckler & Koch has one of the bestreporting of any mid-cap company,” according to the statement,which cited the gunmaker's quarterly calls with investors.

Heckler & Koch password protects parts of its website andBloomberg News' registration last week for access is still pendingapproval.

Restricted access to corporate financial information can hindertrading, said Marc Pierron, a credit analyst at Spread Research, anindependent credit research firm based in Lyon, France.

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