With the high yield market shut and a growing
number of hung high-yield bridge loans, lawyers are focusing on
the terms of the loans. Hastily agreed provisions are being
scrutinised, with three key areas needing to be examined.
The first is security hardening periods, which are
problematic in countries where new security must be taken in
order to be provided in favour of new debt.
In the UK where broadly drafted security
documents in place can be expressed to secure future
obligations, issuing new notes shouldnt be a
problem, said James Boswell, senior associate at Clifford
Chance in London.
But in certain countries such as France and Italy,
new security may need to be taken and is susceptible to
challenge if an insolvency occurs a specified time after the
security is put in place (the security hardening period).