Cov-lite makes a comeback

“If you had asked two or three years ago, when would we see covenant-lite, I think a lot of people, myself included, would say perhaps never,” says Richard Farley, a partner in the corporate practice of law firm Paul Hastings LLP, referring to loan agreements that favor the borrower by imposing few restrictions on ongoing capital levels. “Yet, latter part of last year, it became part of the standard arsenal for the top-tier deals,” says Farley. In this video interview with The Deal magazine, he discusses the lessons learned from cov-lite deals, as well as the trends expected for the rest of the year in the leveraged loan market. Farley predicts a higher trajectory for equity values, prompting the inventory of companies to be sold. – Sarah Hashim-Waris

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