In the years leading up to the credit crunch, the European
leveraged finance market saw a surge in liquidity and jumbo
deals. This led to fierce competition between lenders which,
together with the use of sponsor precedents, resulted in
increasingly borrower friendly leveraged terms. The need to
accommodate institutional investors meant further amendments to
structure, terms and voting.
The credit crunch was seen as an opportunity to rebalance in
favour of lenders. However, the continuing (albeit decreasing)
supply of quality deals and a perception that any slowdown may
last only 12 months meant that leveraged terms were amended
only to the extent considered absolutely necessary to assist
syndication. And even now, with the market screeching to a halt
late last year, banks are conscious that the pendulum may
reverse with the much-anticipated green shoots of recovery.
Change in banking model The lack of liquidity has led to an
increase in club...