Primary markets are experiencing a lull, and in light of Russia’s ongoing invasion of Ukraine, it’s an open question when primary markets will re-open.

When they do, we wonder whether new deal documentation will continue to serve up the same flexible covenant terms we saw in late 2021 and continued to see at the beginning of Q1 2022. We suspect the answer is yes based on how covenants have continued to push the envelope through the COVID period, and keeping in mind that committed financing terms for LBOs already in the pipeline would have been negotiated back when market conditions were more favourable.

In this report, we compare how covenant terms of a few of the “latest and greatest” sponsor deals stack up, spotlight noteworthy covenant innovations and highlight key data on covenant and documentation trends for FY 2021 including voting caps, “no worse”-ification, overall RP + PI capacity, the Available Amount and the Available RP Capacity Amount.

The usual suspects: European sponsor deal line-up

The below table summarises certain key provisions and metrics across a few recent European HY sponsor deals. These deals involved a variety of sponsors and law firms, demonstrating that aggressiveness in basket capacity and documentary provisions (such as “super growers” and the “Available Amount” Restricted Payments (RPs) baskets) are not limited to specific sponsors or legal advisors.