The Ropes & Gray London finance team is delighted to share “Recent Trends in Top Tier Sponsor High Yield Covenant Packages”, an article intended to provide underwriters and sponsors with an overview of the key covenant trends in the European and US markets, with a particular focus on the issues that have received the most attention from high yield investors.

The big picture trends include:

  • Enhanced covenant flexibility in favor of sponsors and issuers.
  • Convergence across term loan B and high yield terms.
  • An emerging duality between different credits stories - aggressive covenant packages were largely accepted for stronger credits without much investor pushback while the covenant package came into sharp focus for more challenging credits.
  • The emergence of ESG features, evidenced by the rise in sustainability-linked bonds.

The article also takes a deeper dive into specific terms that are generally the subject of heightened investor attention and we also offer out outlook on the future development of high yield covenant packages.

We believe this information will be useful to effectively navigate future bridge to bond commitments and high yield syndications, particularly with respect to credits that are at the more challenging end of the spectrum.

For the full article, please click here. If you would like to discuss this topic further, please do not hesitate to reach out to a member of the team.