easy · Debt Capital Markets credit-ratings-risk
In the context of Debt Capital Markets, what is a leverage-based margin ratchet?
- A tool the syndicate desk uses to flex the interest rate during the bookbuilding process.
- A covenant requiring the borrower to maintain a stated minimum amount of cash on the balance sheet at all times.
- A formula used to calculate the original issue discount of a newly issued high-yield bond.
- A mechanism that adjusts the interest margin of a loan based on the borrower's debt-to-EBITDA ratio.
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