The ugly face of event risk

The credit crisis turned event risk into a positive for bondholders but the green shoots of economic recovery may herald the return of negative event risk.

It is often said that there are only three certainties in life: death, taxes and event risk. From a bondholder’s perspective pure event risk – by which I mean action taken outside the normal running of an entity (i.e. share buybacks, special dividends or M&A activity rather than financial meltdowns or other acts of god) – is normally viewed