Home Covenants


Western and Eastern private debt deals have little in common when it comes to how borrowers and lenders are treated.
With covid-19 causing complex disruption to the world of commerce, private equity sponsors, portfolio companies and lenders can work together to deal with financial covenant breaches encountered as a result of operating in such unprecedented times.
Prior to the pandemic, it was commonly believed that a crisis would allow a reset of deal documentation in which the balance of power would shift from borrower to lender. So far, there’s little sign of it.
Performance issues are emerging within private debt portfolios, but plenty of lenders are getting fair warning and not panicking yet.
Borrowers have held the balance of power for some time when it comes to deal negotiations. There are signs that their grip is being loosened, if only a little.
A survey has found almost unanimous agreement among investors in the European leveraged finance market that covenant capacity cannot be accurately calculated.

Copyright PEI Media

Not for publication, email or dissemination