medium · Debt Capital Markets
What happens to a 'Lien' if the underlying debt is refinanced?
- The lien is automatically transferred to the new lender without any administrative action by the borrower.
- The refinancing debt must remain unsecured for at least one year to avoid violating the negative pledge.
- The existing lien is typically released, and a new lien is granted by the borrower to secure the refinancing debt, subject to the 'Permitted Refinancing' carve-outs.
- The original lien remains in place, but its priority is automatically downgraded to junior subordinated status.
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