medium · Debt Capital Markets credit-ratings-risk
How does a portability threshold differ from a standard maintenance covenant?
- It results in an immediate default if the leverage ratio is exceeded at any time.
- It is only found in investment-grade bonds with high liquidity.
- It is only tested at the time of a specific event rather than on a recurring quarterly basis.
- It requires the issuer to keep leverage above a certain floor to maintain the bond's listing.
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