Our Legal Insights Blog

Before you embark on any covenant analysis journey for any given deal, you need to know where you’re starting out from before you can analyse where things might be headed.

There are several ways that subordination can be embedded in a capital structure and covenant package, and given how important it is to knowhow much debt can potentially be repaid ahead of you, this blog explains three different types of subordination and how to find them.

Our Leveraged Finance Covenant Training now qualifies as an accredited course for continuing professional development (CPD) following approval by the CPD Certification Service, and not a moment too soon. Two high-profile examples of contractual terms delivering harsh results to lenders in recent weeks demonstrate the importance of keeping current on covenant evolution.

Much ink has been spent, and more will no doubt flow, following the write-down of Credit Suisse’s AT1 notes. The implications of the Swiss regulator’s actions spread far beyond that jurisdiction, or indeed that particular asset class, and lessons are being learned by investors across the leveraged finance ecosystem.

The challenges facing Credit Suisse AT1 bondholders illustrates well why my answer is always the same, regardless of the borrower in question: start by reading the Risk Factors.

There has never been a more critical time to invest in an insurance policy that can help protect lenders and other market participants against further shocks – education.

The thoughtful drafting uses a standard high yield covenant package as a template, then artfully pares back flexibility that could impede lenders’ right to be paid coupon and principal at maturity.

Last week, Bloomberg published a story called ‘Fake Ebitda’ Masks Risk in Debt-Laden Companies, noting how bad management is at forecasting EBITDA.A report from S&P reveals that 97%of sub-IG companies that announced acquisitions in 2019 fell short of EBITDA forecasts in their first year of earnings.