Leveraged Finance 101: A Covenant Handbook is a primer on the concepts that any company, from early stage pre-IPO companies to seasoned issuers, considering a leveraged finance transaction should understand. The Covenant Handbook covers the key leveraged finance markets—leveraged loans and high yield bonds—which are among the key tools in the finance playbook.
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Simpson Thacher’s Covenant Handbook consists of two concise guides, which cover the covenants for each of the key leveraged finance markets. The Concise Guide to High Yield Notes explains the key impacts of high yield covenants on the financial and strategic flexibility of issuers, as well as the typical areas of focus for investors in high yield debt securities. The Concise Guide to Credit Financing provides a primer on the differences between the covenants and other key terms found in loan financings and those in high yield debt securities.
The Concise Guide to High Yield Notes covers crucial concepts that set the stage for the discussion of the covenants, the restricted payments covenant limiting dividends, distributions, redemptions of junior capital and investments, the debt and lien covenants limiting the ability to incur unsecured and secured debt, the asset sale and change of control covenants, transactions with affiliates, limitations on subsidiary distributions, mergers and reporting, optional redemption provisions, and key definitions of Consolidated Net Income and Consolidated EBITDA.
The Concise Guide to Credit Financing focuses on covenants with respect to investments, restricted payments and restricted debt payments, the debt and lien covenants, covenants governing asset sales, change of control, and prepayment provisions.
We hope you find our Covenant Handbook to be a useful tool and, of course, if you have any questions, please do not hesitate to contact us at [email protected]. We have a preeminent position in the leveraged finance market and would be happy to be of service.
For more information on our leveraged finance team, please visit our Leveraged Finance webpage.