Weak covenants threaten recovery – Fitch
Loan covenants provide enterprise value protection and may preserve recovery values on defaulted debt instruments, according to a new study from Fitch Ratings. Despite the recent spike in risk aversion and the potential for traditional covenant packages to make a comeback in newly originated deals, the volume of loans outstanding with weak covenant protection is significant and likely to have meaningful consequences as economic activity softens.
“The tightening of market conditions does not
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