medium · Corporate Credit Analysis covenants
In the context of 'Liability Management', what occurs during an 'Uptiering' transaction?
- The borrower issues new equity to pay down the most senior tranche of debt to improve its rating.
- A majority of lenders agree to amend the credit agreement to subordinate non-consenting lenders and exchange their own debt for super-senior claims.
- The maturity of the entire debt stack is extended by five years in exchange for a higher coupon.
- Assets are moved to an unrestricted subsidiary to serve as collateral for a new, separate loan.
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