medium · Debt Capital Markets
In a distressed credit situation, why might lenders push for a 'gross' leverage covenant instead of a 'net' leverage covenant?
- Because gross leverage is easier to calculate during an audit
- To ensure the borrower pays a higher interest rate
- To prevent the borrower from appearing compliant by simply drawing the revolver and holding cash
- Because net leverage is illegal in some jurisdictions
Sign up free to see the explanation and track your rank →
More Debt Capital Markets practice
- In the context of Debt Capital Markets, what is a leverage-based margin ratchet?
- Which officer of a borrower is typically responsible for signing the compliance certificat
- Why is the Administrative Agent's role important for the margin ratchet?
- 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?
- For a bond trading at a discount (below par), which yield measure is typically the same as
- What is a 'call schedule' for a corporate bond?
- If a bond's Yield to Worst is equal to its Yield to Maturity, what can we likely conclude