Buyers have rebelled against bond offerings that tried to deprive them of penalty payments when a company breaches its credit pact, forcing changes to at least $17 billion in new debt.

Companies including General Motors Co., insurance brokerage Marsh & McLennan Cos. and chipmaker Broadcom Ltd. bowed to a firestorm of protests Wednesday by dropping language designed to eliminate the penalties, according to regulatory filings and people with knowledge of the matter. The payments can be triggered by dozens of missteps, such as piling up too much debt or letting cash sink too low, that could make a company riskier than bondholders expected.

The simmering dispute erupted this week as the new terms were spreading from junk-rated bonds into investment-grade offerings, the people said, asking not to be identified as the discussions weren't public. Debt-research firm Covenant Review beseeched clients to push back, calling the new wording "horrible," "terrible" and "dangerous," and warning of more breaches if the language becomes standard.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.