Covenant CPD is Essential to Avoid Costly Contractual Pitfalls

Covenant CPD is Essential to Avoid Costly Contractual Pitfalls

Our Leveraged Finance Covenant Training now qualifies as an accredited course for continuing professional development (CPD) following approval by the CPD Certification Service, and not a moment too soon. Two high-profile examples of contractual terms delivering harsh results to lenders in recent weeks demonstrate the importance of keeping current on covenant evolution.

I recently wrote about the unfortunate outcome for Credit Suisse AT1 bondholders resulting from the write-off of their notes by the Swiss regulator – a potentiality disclosed in the Risk Factors section of the prospectus. You can read my thoughts on that situation [here].

Another set of lenders found themselves on the wrong side of contractual provisions in the Serta Simmons case. Left in the minority lender group following an up-tiering transaction, a judge recently ruled that the claimants should have known from reading the loan contract that the transaction was permitted.

The FT recently reported the judge’s comment in his oral ruling: “I sit with these matters every single day. Sophisticated parties know what words they want to choose…this is very easy for me.”

New York courts are notoriously tough on sophisticated contracting parties – “read the docs” is an apt summary of contract law in the jurisdiction that governs most high yield bonds, and most incurrence covenants in term loans, even in Europe.

Continuing professional development is a requirement for many professionals in the leveraged finance market for just this reason – it is essential to continue up-skilling throughout one’s career, particularly in an industry subject to swiftly shifting sands.

Students that complete our Leveraged Finance Covenant Training will receive 10 hours of CPD credits following successful completion of our final exam. The course is designed to ensure that the information is learned step-by-step, from the foundations of contract negotiation and deal processes, o capital structure and credit support, then layers on each covenant and its key risks and constituent parts before covering important topics like calculation mechanics, defaults, reporting, amendments, and ESG.

Quizzes at the end of each chapter ensure that students are understanding the material, and periodic Zoom Q&As with me will ensure that no question is left unanswered.

The savvy lender will not wait until the contract surprises them (translation: costs them money), as borrowers are already well aware of the flexibility in their documentation. Get in touch for a demo, fulfil your CPD requirements with FLT, and stay on the right side of contractual complexity.

By Sabrina Fox