Cloud 9fin
The best and worst of high yield bond covenants
Mar 14, 2024
European bond investors face threats to restricted payment builder baskets but are better protected against being J.Screwed. Insights from 9fin's report on high yield bond covenants are discussed. Topics include EBITDA addbacks, J. Crew blockers, portability, and refinancing trends.
21:13
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Quick takeaways
- Refinancing trend dominates bond deals; poses potential stagnation in covenant evolution.
- Builder basket provisions showcase increased flexibility, zero floor benefits in recent bond deals.
Deep dives
Refinancing Dominance in 2023 Bond Deals
Refinancing emerged as a prominent theme in the analysis of 2023 bond deals, constituting about three quarters of the observed deals. This trend often leads to a starting point for new bond deals based on previous ones, potentially resulting in less movement or evolution. The duration between refinancing deals varied for different issuers, impacting the introduction of new elements into the market.
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