Deals
Yield Hunt Emboldens Companies to Chip Away Loan Safeguards
- Issuers using more future cost cuts to boost creditworthiness
- Lenders agreeing to terms ‘they should be fighting off’
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Riskier companies are increasingly getting credit agreements that allow them to raise the amount of future cost savings to appear more creditworthy, boosting potential losses for investors.
The tweaks make it easier for borrowers to stay in compliance with their loan terms and add more debt, according to Charles Tricomi, a senior analyst at covenant research firm Xtract Research.