medium · Corporate Credit Analysis
A credit analyst is reviewing an indenture where 'Cross-Default' is defined to occur only upon 'default in the payment of principal or interest at final maturity' of other debt.
How does this compare to standard 'Cross-Default' language?
- It is standard language for High-Yield bonds but rare for Leveraged Loans.
- It is significantly more restrictive for the borrower than standard language.
- It is a 'limited' cross-default that ignores interim covenant breaches or missed interim payments on other debt.
- It is effectively a 'Cross-Acceleration' clause.
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