Looser loan terms clear way for more ‘c-on-c violence’
Creditor-on-creditor fighting likely to build, as carve-outs for struggling borrowers get wider
A feature in leveraged loan documents used by struggling borrowers to raise new debt has been getting looser, data shows. Lawyers say it will lead to an upsurge in so-called creditor-on-creditor violence, where groups of lenders clash over the extension of new financing to troubled companies.
Average exceptions to covenants – known as baskets – that borrowers can exploit to raise more funding have grown larger, even as borrowing costs have risen, data from Covenant Review shows.
The exceptions
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