Americas: Cov-lite: the next international bonds?

Author: | Published: 24 Apr 2014
Europe’s cov-lite frenzy could have a similar effect
The growing number of covenant-lite (cov-lite) loans in Europe has prompted the question of whether the market could cut into the cov-lite deals that are completed in the US. With the number of these deals growing internationally and covenants increasingly disappearing, a second question about shrinking space between cov-lite loans and bonds is also in need of an answer.

Leveraged loans in the US traditionally provided less protection than their European counterparts. This helped to attract business across the Atlantic for so-called Yankee deals. A more active capital markets...