Sponsor-backed deals flooded the market, printing even more than in 2021 according to 9fin data. But fear not, investors did not give sponsors free reign, with 20 deals failing to clear the market unscathed. 17 of those deals involved the addition, and/or tightening of, a J.Crew blocker.

Although a trickle of LBOs hit the market over summer, M&A activity remained subdued and flotations proved not to be an attractive option. With the view of returning cash to investors, dividend recapitalisations became the transaction du jour.

But the cobwebs of the 2022 and 2023 markets have been brushed aside, allowing sponsors to test investor appetite for sponsor-friendly terms and ever growing covenant capacity.

What did 2024 mean for covenants?

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