hard · Private Credit & Debt documentation-covenants-terms
What is the primary danger of a 'Covenant-Lite' loan for a private debt lender?
- The requirement to pay higher management fees to the GP.
- The automatic conversion of debt into equity upon a leverage breach.
- The inability to intervene and restructure the debt before a payment default occurs.
- A reduction in the floating-rate margin over SOFR.
Sign up free to see the explanation and track your rank →
More Private Credit & Debt documentation-covenants-terms practice
- If the current SOFR rate drops to 0.25%, what is the all-in interest rate the borrower mus
- A borrower's credit agreement includes a 'Negative Pledge'.… — Is this allowed?
- A loan is priced at SOFR + 600 bps with a 1.0% floor. If the current SOFR rate is 0.5%, wh
- If Term SOFR is currently 0.75% and the loan was issued with a 2.0% Original Issue Discoun
- What is the company's 'covenant headroom' in EBITDA terms?
- Is the company in default?
- A loan agreement specifies that the borrower's Total Leverag… — How should this covenant b
- What is the immediate consequence for the CLO Equity holders?