medium · Corporate Credit Analysis

In a 'Double-Dip' or 'Uptiering' transaction, why might non-participating lenders be particularly worried about cross-default provisions?

1. Because the new 'super-priority' debt will likely contain cross-default triggers that prime their own.
2. Because if the borrower defaults on the new super-priority debt, it will automatically trigger a default on their own debt via cross-default.
3. Because they may be forced to accelerate their debt before they are ready.
4. Because cross-default clauses increase the 'effective life' of the loan.

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