In one of the more profound shifts in leveraged loan covenant protection, the percentage of leveraged loans that waive excess-cash-flow recapture reached an all-time high of 42% in the first quarter of 2015.
This is, managers say, a relevant data point. After all, a decade ago most loans required that 75% of excess cash flow be used to prepay the debt. For these loans, a trigger that reduced the level to 50% was common.
In recent years, however, a 50% sweep has become market standard. - Steve Miller
This chart is taken from an LCD News story, available to subscribers here, that also details
- Covenant-lite loan outstandings
- Distribution of loans by cash-flow sweep
- Distribution by number of financial covenants