The economic damage caused by the COVID-19 crisis is proving to be more severe, and promising to linger a lot longer, than initially expected. As a consequence, over the coming months, more borrowers are likely to seek accommodations under their existing credit agreements, particularly in relation to financial maintenance covenants and liquidity enhancements.

In this briefing my colleague Alex Mocanu and I outline this trend. In particular, we discuss financial covenant relief, modifications to EBITDA calculations and reporting requirements, liquidity enhancement strategies, and other amendments and considerations.

It is likely that the trends identified in the loan market will continue and evolve based on the length and severity of the COVID-19 crisis, availability of government-backed financing and recovery in the syndicated term loan markets.