Covenant-Lite Loan Trends

Review this new market trend practice note for an overview of covenant-lite loans in today’s market. The note discusses recent market trends in publicly filed covenant-lite credit agreements since the second half of 2024. The term covenant-lite broadly refers to borrower-friendly loan transactions having limited or no maintenance-based financial covenants.

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Related Content

• Financial Covenants and EBITDA Calculations in Credit Agreements
  Understand the use of financial covenants in credit agreements, which require the borrower to comply with negotiated financial performance benchmarks. This practice note also discusses how EBITDA is defined in a credit agreement.

• Affirmative, Negative, and Financial Covenants
  Learn about the covenants found in credit agreements (i.e., promises made by the borrower to take certain actions, or to refrain from certain actions, during the life of the loans), along with the processes by which loan parties are captured, or not, by those covenants.

• Financial Covenants Clauses (Credit Agreement)
  Use these clauses in your credit agreements for syndicated loan transactions to require the borrower to comply with negotiated financial performance standards. These clauses assure lenders that the borrower will be able to repay its loans as planned.

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