The signs of a bullish market are in the numbers (and covenants!). Although the highs of 2021 have not been matched (yet), H1 24 has certainly given it a run for its money and with no signs of the market slowing down, covenants continue to loosen.

Whilst refinancings once again continue to drive the market, LBOs and other new money deals have started to creep in suggesting confidence is returning to the market. This new found confidence has trickled into the world of covenants giving the issuers an upper hand in what is often a tug of war between issuers and bondholders over covenant flexibility. However, it’s not just issuer confidence that has grown, H1 24 has experienced a healthy amount of bondholder pushback (mainly around the addition of J.Crew blockers).

Ultimately the proof is in the pudding — TLDR:

• RP, investment and incremental debt capacity continues to bounce back from 2022 with LBOs helping to push the boat out
• Bondholders will be pleased to hear that J.Crew blockers are all the rage (five deals couldn’t clear the market without one)
• Leverage-based portability takes centre stage: whilst the number of deals including the feature took a slight knock, those that did include it made sure they had an immediate exit strategy with the majority being set above opening leverage
• Uncapped EBITDA add-backs and a 24 month time horizon appears to be the new package deal
• Zero floors have cemented themselves on RP CNI builders with an uptick in positive CNI-only builders
• Terms that became synonymous with the 2021 bumper year such as the Available Amount and Available RP Capacity Amount remained at bay when compared to previous years