Purchase Agreement Checklist (High Yield Debt Offering)

Summary

This checklist highlights the parties and key sections that feature in a typical purchase agreement for a high yield debt offering. The purchase agreement in an offering of New York law-governed high yield bonds is the primary contractual agreement governing the relationship between the issuer and the guarantors (if any) on the one hand, and the initial purchasers on the other hand. A purchase agreement sets out the price, terms, and conditions on which the issuer agrees to issue, and the initial purchasers agree to purchase, the bonds. In most cases, the purchase agreement is drafted by the counsel for the initial purchasers on the basis of the lead initial purchaser’s form of purchase agreement, or another agreed precedent purchase agreement. A purchase agreement differs from an underwriting agreement in that the initial purchasers are not underwriting the bond offering, but instead purchasing the bonds on a “best efforts” basis. The bonds purchased and sold under a purchase agreement are typically being sold under an exemption from registration under the U.S. Securities Act of 1933, as amended — typically under Rule 144A and Regulation S.