Fall 2012

A High Yield Capital Markets Alternative to Bank Debt: Practical Considerations for Financial Managers Confronting Reduced Bank Credit Availability in the Face of the Refinancing Wall

Summary: Recent progress has been made in reducing the refinancing wall, but changing bank regulatory requirements will likely inhibit the availability of bank debt, particularly for speculative-grade borrowers, while the demand for debt capital to fund refinancing activity and business development remains significant. This client alert briefly evaluates the current state of the refinancing wall; outlines the potential vulnerability of speculative-grade borrowers to reduced bank lending; and provides an overview of the negotiation and function of high yield covenants, with a particular focus on issues of practical importance for financial and other non-legal managers of speculative-grade borrowers that may be considering alternatives to bank financing.

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