Leveraged Loan Documentation / Negotiated Items
Hi All,
I'm new to the forums and have just recently started as an analyst in a leveraged finance group. As the title indicates, I'm interested in ways to become familiar with loan documentation, specifically industry standard negotiated points including restricted payments, available amount baskets, covenants, incremental facilities etc.
I have a general understanding of the concepts of each but was hoping someone knew of a comprehensive resource(s) that explain these in-depth or personal experiences getting up to speed
Thanks!
interested in this as well. You can start by putting your hands on the LMA guidance documentation. Some companies also publish their loan documentation, you could spend some time reading these
Thanks, I will definitely look up the LMA guidance. Anyone else have suggestions? Not just on structure but in terms of what each side is most concerned about when negotiating a doc - as in what points will a PE firm/company really push for flexibility while the bank/investor will push back for added protection.
It seems like financial covenants are the biggest point (maybe less so currently as more deals are cov-lite) but what comes next in terms of importance and why? I'd greatly appreciate any feedback, especially from someone who negotiates docs in their current/former role
Anyone?
Prepayment/call provisions are quite important.
S&P have a good leveraged loan guide, as does one other source I can't recall. IM me a reminder tomorrow and I'll post links to the pdfs plus Amazon link to a great book on the topic. I give these to each of the new starters in my team.
I've posted those before and, if you're super keen, you can probably find in my post history.
Some links:
http://www.amazon.com/Leveraged-Financial-Markets-Comprehensive-Instrum… This book is a good guide to leveraged financial markets and has a good chapter on lev fin terms. However, if the doc terms are all you're after, you can download the chapter written by the Cravath partner on bond terms from Cravath directly: http://www.cravath.com/files/Uploads/Documents/Publications/3234772_1.P…
Take a look at the S&P leveraged loan guide as well: https://www.lcdcomps.com/d/pdf/LoanMarketguide.pdf
That guide has some commentary relevant to debt doc terms.
There's one more guide, but I'll need to dig up the link when I'm at work tomorrow.
Last link - the Mayer Brown guide to high yield bonds: http://www.mayerbrown.com/High-Yield-Bonds---An-Insiders-Guide-3rd-Edit…
Check out page 13ff on covenants.
Although these are high yield bond terms, from a beginners perspective there is not a significant degree of difference between leveraged loans and high yield bonds when it comes to covenant protections. The distinction between leveraged loans and bonds is more about who you are selling the debt to.
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