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Fewer covenants can provide greater flexibility in dealing with portfolio company difficulties, but they may also prevent lenders from negotiating rescue plans with borrowers and sponsors. Andy Thomson and Andrew Hedlund investigate
The restricted payments covenant has changed unrecognisably as borrowers seek more room for manoeuvre in a downturn.
The trend of deteriorating covenants looms over lenders’ risk protections, yet Asia still ranks top in covenant quality globally.
Unable to force deal sponsors to the table in times of stress, lenders find themselves effectively handcuffed. No wonder the covenant-lite loan remains one of the asset class’s big talking points.
Howard Marks Oaktree video
Complacency may have crept into the private debt market. An inevitable change in circumstances will put firms to the test, says Oaktree co-chairman Howard Marks in this video.
What defines the Stateside private credit market in 2019? Our recently published US report identified the following themes.
Steven Miller and Jessica Reiss of Fitch Solutions examine the subtle changes to credit agreements that could pose a danger when today’s deals are affected by the next downturn.
The European Leveraged Finance Alliance has sent would-be investors in high yield bonds a questionnaire to encourage issuers to open up on key deal terms.
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