Term loan B markets: what borrowers should expect this autumn
After a busy first half, many borrowers are returning to the institutional loan market with refinancing and repricing on their agenda. The questions we hear most often are about timing, documentation terms and how much flexibility lenders will accept.
Timing and execution
Market windows can open and close quickly. Borrowers who prepare documentation, ratings and lender materials early are better placed to launch when conditions suit them, rather than when a maturity forces their hand.
Documentation terms
Investors continue to scrutinise provisions that let value move away from the credit group, such as broad baskets for asset transfers and incremental debt. Expect targeted questions and, in some deals, tighter drafting in exchange for pricing.
What to do now
Review upcoming maturities and call protection.
Refresh ratings and lender materials.
Identify the documentation points that matter most to your business.
Consider whether a parallel private credit process makes sense.
General information only, not legal advice. Back to top
ArticleFinance
Private credit and the return of covenant negotiation
As private credit has grown, lenders and borrowers have become more willing to negotiate financial covenants rather than simply accept market templates.
Why covenants are back in focus
Higher funding costs put more pressure on cash flow. Lenders want earlier warning of trouble, while borrowers want headroom that reflects their business plan.
Points under negotiation
Definitions of EBITDA and permitted adjustments.
Testing dates and equity cure rights.
Headroom levels and step-downs.
The consequences of a breach.
Our view
Well-drafted covenants protect both sides. The most productive negotiations start from the borrower's model and focus on the few definitions that actually drive the numbers.
General information only, not legal advice. Back to top
BriefingCapital markets
Sustainability-linked loans: updated principles and practical drafting points
Sustainability-linked loans tie the margin to performance against agreed targets. Market principles have been refined to address concerns about ambition, verification and transparency.
Setting targets
Key performance indicators should be material to the borrower's business, and targets should go beyond business as usual. Lenders increasingly expect a clear link to the borrower's wider sustainability strategy.
Verification and reporting
Independent verification of performance is now standard on most transactions. The facility agreement should set out what is reported, when, and what happens if reporting is late.
Practical drafting points
Define each indicator and its calculation method precisely.
Deal with recalculation after acquisitions or disposals.
Set out the margin adjustment mechanics clearly.
Check how the provisions interact with any green use-of-proceeds tranche.
General information only, not legal advice. Back to top