hard · Debt Capital Markets bond-instruments-structures
In a Bridge-to-Bond financing scenario, a sponsor acquires a target using a $500 million Senior Bridge Facility. The target's existing bonds have a portability threshold of 6.0x. Pro forma for the deal, Net Debt is $1.3 billion and EBITDA is $210 million. However, the portability clause specifies that 'Net Debt' excludes any Bridge Facilities with a maturity of less than one year.
Is the CoC put triggered?
- No, because the adjusted Net Debt for the test is $800 million, resulting in a 3.8x leverage ratio.
- Yes, because the 6.19x actual leverage exceeds the threshold, and bridge exclusions only apply to revolving credit lines.
- Yes, because the bridge facility is a debt obligation that must be counted toward the total leverage of the enterprise.
- No, because portability is automatically granted for any bridge financing intended to be refinanced in the capital markets.
Sign up free to see the explanation and track your rank →
More Debt Capital Markets bond-instruments-structures practice
- If a company has a leverage-based pricing grid and SOFR rises significantly while leverage
- What is meant by the 'bond floor' in the context of yield analysis?
- What is a 'call schedule' for a corporate bond?
- Which of the following describes a 'step-up' coupon in a callable bond?
- What is a 'deferred call'?
- What does a 5-year bond described as 'NC2' signify regarding its call protection?
- A 'make-whole' call differs from a standard 'fixed-price' call because the redemption pric
- If a bond has a 'Par Call' feature starting 6 months before maturity, what does this mean?