Banks sound alarm as LBO sponsors look to slash incurrence covenants

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Banks sound alarm as LBO sponsors look to slash incurrence covenants

alarm bell

With demand for leveraged loans far outweighing supply, deal sponsors are pushing for unprecedentedly loose documentation, writes Olivier Holmey. Already reducing margins, extending maturities and pushing up leverage ratios on their portfolio companies’ debt, private equity firms are now even seeking to rid transactions of their core incurrence and maintenance covenants.

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