Covenants

Covenant breaches set alarm bells ringing

Performance issues are emerging within private debt portfolios, but plenty of lenders are getting fair warning and not panicking yet.

Do the documents offer lenders hope?

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.

Investors call for greater covenant transparency

A survey has found almost unanimous agreement among investors in the European leveraged finance market that covenant capacity cannot be accurately calculated.

Lenders should look beyond covenants for downside protection

While the eyes of many are on loan documentation, Nicole Downer of MV Credit says the focus should be elsewhere, including fostering solid relationships with sponsors.

Do addbacks have the power to eradicate covid-19?

It was widely predicted that the market downturn would profoundly alter behaviour in leveraged finance, but then along came EBITDAC as a reminder of the past.

EBITDAC: How companies may seek to increase debt by ‘adding back’ pandemic losses

As an example of the practice surfaces, an industry body is warning other companies not to use the covid-19 outbreak as an excuse to try and raise additional finance through flexible documentation.

The questions borrowers may struggle to answer

A new reporting guide will divide the companies that are keen to impress with their transparency from those uncomfortable under the spotlight.

How indebted Chinese developers can get more leverage – report

Looser debt covenants could allow an increasing number of rated Chinese property companies to take out even more debt, says a Moody’s report.

Covid-19 sees the bill come due

The outbreak of the virus is the trigger for the pain likely to be suffered by many lenders and investors. But Gregory Racz of MGG Investment Group says the roots of this pain were to be found in poor deal structuring.