30 Jun 2020|Moody's Investors Service
Speculative-grade companies have unprecedented flexibility to react to the current downturn without bondholder interference. Companies owned by private equity are particularly unfettered.
North American Bond Covenant Quality Indicator: CQI nears its record worst as investors prioritize yield over protections
16 Jun 2020|Moody's Investors Service
The CQI moved to 4.54 (weakest) in May from 4.53 (weakest) in April and 4.47 (weakest) in March, remaining above 4.40 for a record thirteenth consecutive month and in weakest-level territory for the seventeenth consecutive month.
20 May 2020|Moody's Investors Service
While credit agreements lack stand-alone provisions to exercise remedies based solely on a material adverse effect, covenants requiring clean audited financial statements may fill the gap.
North American Loan Covenant Quality Indicator: Protections hit rock bottom just ahead of market turbulence
27 Apr 2020|Moody's Investors Service
Just before the coronavirus pandemic grinded new loan issuance to a halt, the LCQI bottomed out at its weakest-ever level in the fourth quarter of 2019.
20 Apr 2020|Moody's Investors Service
Covenant quality improvement during the six months that ended on 31 March 2020 signals a slight increase in bondholder protections, but the risk of cash leakage is rising. Covenant quality in emerging markets remains stronger than in North America and EMEA (excluding emerging market countries).
High-yield bond covenants — China: Looser debt covenants for Chinese property developers will preserve debt capacity in a coronavirus-led downturn
02 Apr 2020|Moody's Investors Service
As debt may become more expensive and EBITDA deteriorates in a coronavirus-led downturn, Chinese property developers that lowered the fixed-charge coverage ratio (FCCR) threshold under their debt incurrence tests ($1 debt test) are better able to preserve capacity to incur debt.
High Yield Bond Covenants – North America: Flexible covenants give sponsors access to liquidity but put bondholders at risk
08 Apr 2020|Moody's Investors Service
Thanks to flexible debt incurrence covenants, PE-sponsored companies in distress can act quickly to access liquidity without notifying or compensating bondholders.
Leveraged loan covenants – North America: Revolving lenders have upper hand over term lenders as crisis stresses borrowers
26 Mar 2020|Moody's Investors Service
Leveraged loan documents do not provide institutional loan investors with the right to influence how borrowers respond to financial deterioration caused by the coronavirus. Maintenance covenants in revolving credits offer institutional loan investors
some derivative protection.
some derivative protection.