By Yoruk Bahceli
LONDON (Reuters) – Before the coronavirus, investors hungry for returns piled into risky corporate loans and bonds with precious little protection for creditors. Now they’re frantically scouring the terms to see just what firms can get away with to survive the fallout.
At the same time, firms starved of cash and funds thinking about lending to them are also poring over the fine print to see what room they have to shift assets away from other creditors, pay dividends or borrow more while staving off default.
With the coronavirus pandemic threatening to trigger a surge in corporate loan defaults, borrowers and investors in so-called covenant-lite loans and high-yield bonds with weak protection for creditors are taking stock fast.