
Conversations: Fighting the Fed with Armen Panossian, Danielle Poli, and Megan Messina
The Insight by Oaktree Capital
The PCCU and the Rise of Interest Rates
A lot of companies put in place capital structures with the expectation that rates were not going to increase significantly and then they did. Interest coverage ratios have dropped to dangerously low levels for some borrowers, especially when you calculate that with a forward projection of base rates above 5%. I think we will expect borrowers to increasingly need these types of concessions from their lenders or ask for additional equity injections from their owners.
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