Negative undertakings
Once the yield that is high and loan areas have actually converged as time passes, different high yield relationship covenant elements have now been included into leveraged loans. In lot of methods (and beyond the primary range of the article), it has added elements which have increased the size of loan agreements either with the addition of brand brand brand new conditions, or making current provisions a lot longer. By means of examples:
- Financial incurrence ratios – many cov-lite loans allow indebtedness become incurred in conformity with particular ratio-based incurrence that is financial. These usually include either a leverage that is net test and/or a set cost protection ratio test for unsecured or junior guaranteed indebtedness and a senior guaranteed leverage ratio test for guaranteed indebtedness. Continue reading “Longer and longer: the ever lengthening loan agreement”