“Though the trailing default rate in leveraged loans has remained stubbornly below its 2.9% historical average, several indicators point to increasing pressure.” – by Rachelle Kakouris
Cov-Lite
Cov-Lite Breaking Record (LCD News)
A new record: 79.6% of the $1.8 trillion in US #leveragedloan outstandings is cov-lite. That's about $940B. The bulk of that ls riskier debt, from issuers rated B and B- pic.twitter.com/cwjDI9sUvR — Leveraged Loans (@lcdnews) September 20, 2019
Restructuring the next wave of cov-lite debt (JDSupra)
“89% of European HY bond deals in 2018 provided for cost savings and/or synergies to be included in EBITDA or pro-forma adjustments.” “85% of all leveraged loans in the UK were cov-lite by the end of 2018.” by White & Case
A leveraged loan bust will hurt less than subprime mortgages (FT)
“Expect investors rather than banks to be hardest hit by the next meltdown” – Anthony Carter
Fate of Leveraged Loans Won’t Be Decided by ‘Cov-Lite’ Alone (Bloomberg)
“Recovery rates likely lower in Europe but widely dispersed. Focus on absence of maintenance tests is ‘simplistic’” – by Ruth McGavin