European term loan B to overtake high yield

Author: Lizzie Meager | Published: 9 Nov 2015

The issuer-friendly call provisions of cov-lite term loan B (TLB) products and lack of liquidity in the secondary bond market is prompting a continued shift towards loan structures across Europe.

Panellists at the Afme European high yield conference in London last month agreed that this trend will continue into 2016.

In an audience survey during the conference, TLB/cov-lite was revealed to be the single biggest competitive alternative debt product to high yield. And the proof is in the numbers: up from zero deals in 2011, 45% of Europe’s institutional loan market is now cov-lite.

"As cov-lite structures have become popular in Europe, we’ve shifted almost entirely to those structures, even on some refinancings," said Nishant Nayyar, principal at private equity firm Apax Partners, during a panel. "We can get an equivalent or even better cost of...