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High-Yield Debt Covenants and Their Real Effects
High-yield debt, including leveraged loans, is characterized by incurrence financial covenants, or “cov-lite” provisions. Unlike, traditional, maintenance covenants, incurrence covenants preserve equity control rights but trigger pre-specified restrictions on the borrower’s actions once the covenant threshold is crossed. We show that restricted actions impose significant constraints on investments: Similar to the effects of the shift of control rights to creditors in traditional loans, the drop in investment under incurrence covenants is large and sudden. This evidence suggests a new ...
Act Now, and Choose Wisely
Remarks at the 2021 ISDA North America Conference (delivered via videoconference).
Prepare for Landing
Remarks at the ISDA Benchmark Strategies Forum (delivered via videoconference).
The LIBOR Countdown Has Not Stopped
Remarks at the IMN Virtual Investors' Conference on LIBOR.
A Resolution for 2021: No New LIBOR
Remarks at the Securities Industry and Financial Markets Association’s LIBOR Transition Forum (delivered via videoconference).