Structuring Covenants in Leveraged Loans and High Yield Bonds for Borrowers and Lenders

Analyzing Financial and Performance Covenants, Equity Cures, Builder Baskets, Events of Default, and More

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, July 7, 2015

Recorded event now available

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Program Materials

This CLE webinar will discuss current market terms and conditions for leverage loans and high yield bonds. The program will discuss various covenants, particularly financial and maintenance covenants, equity cures, builder baskets and other key terms and covenants. The program will discuss issues from both borrowers and lender perspectives

Description

Due in part to low interest rates, reduction in defaults and investor demand for higher yield bonds, the market has seen a tremendous growth in the issuance of covenant-lite leveraged loans as well as high yield bonds with similar lax covenants.

Prevailing trends are issuance of loans and bonds that do not contain maintenance covenants. Alternatively, documentation may include springing maintenance covenants, performance cushions and equity cures. Often borrowers are allowed to incur additional debt, make acquisitions and repay subordinated debt.

Listen as our authoritative panel of finance practitioners analyzes current market terms and conditions for leverage loans and high yield bonds. The panel will review current covenants, particularly financial and maintenance covenants, equity cures, builder baskets and other key terms. The panel will address these issues from both borrowers and lender perspectives.

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Outline

  1. Current covenants
    1. Equity cures
    2. Additional debt occurrence
    3. Acquisitions
    4. Repayment of subordinated debt
  2. Similarities of loan terms with high-yield bonds
    1. Restricted subsidiaries
    2. Builder baskets
    3. Events of default
  3. Opportunities and risks for borrowers and lenders

Benefits

The panel will review these and other key issues:

  • What are the market forces impacting covenants in leveraged loans and high-yield bonds?
  • What are typical features of covenant-lite loans?
  • What are typical features of high-yield lite covenant packages?

Faculty

Maura E. O'Sullivan
Maura E. O'Sullivan

Partner
Shearman & Sterling

Ms. O’Sullivan has extensive experience in representing financial advisors, lenders and borrowers in various...  |  Read More

Jason D. White
Jason D. White

Partner
Shearman & Sterling

Mr. White advises banks and other financial institutions on leveraged and investment grade financings, workouts,...  |  Read More

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