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Safety Becomes Stigma as Leveraged Loans Cut Out Covenants

  • In a complacent market, good protection just raises suspicion
  • SnapAV, Rough Country among borrowers to sell cov-lite loans
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Protections have gotten so lax in the $1 trillion market for U.S. leveraged loans that if an offering comes with decent covenants, lenders take it as a sign that something’s wrong with the deal.

“You do have to think twice when you see a loan with a covenant these days,” says Thomas Majewski, managing partner and founder of Eagle Point Credit Management.