Fitch Ratings said on Tuesday that the increasing ability of leveraged borrowers to add additional debt without investor pushback would adversely affect the recovery rates for lenders in the event of a default.
The rating agency highlighted on Tuesday the increasing ability of borrowers to expand the amount of debt they can incur without requiring the consent of lenders, because of loosening covenant restrictions, as well as stretching the limits of leverage ratio baskets by using loose definitions of Ebitda. Sponsors
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