Covenant-lite facilities: overview

An overview of "covenant-lite" (also known as "cov-lite") loan facilities. This note examines how and why covenant-lite facilities developed, identifies the different types of covenant-lite facility that have emerged in the European leveraged finance market (including covenant-loose facilities) and their features and identifies key issues to consider when negotiating a covenant-lite facility. It also discusses the difference between maintenance and incurrence covenants.


 

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