The ABCs of LMTs
According to a recent newsletter from the restructuring news outlet PETITION, the amount of distressed paper in the market is down significantly from the start of the year, and according to JPMorgan this is in large part due to the high number of liability management transactions (LMTs).
Debtwire believes this trend is set to continue throughout 2024 “as advisors continue to test the boundaries of credit documents.” Companies are still struggling with higher interest rates and inflation, which to some restructuring professionals signals an even busier year for them this year than last.
What does this mean for leveraged finance market participants?
Understanding the docs is even more important this year than it was last year, making FLT’s flagship course – our Leveraged Finance Covenant Training – and our newest course on Advanced Covenant Analysis, must-haves for firms looking to stay ahead of the curve on LMTs.
The first module in our Advanced Covenant Training course, Covenant Analysis in Stressed and Distressed Scenarios, takes students step-by-step through the key documentary provisions underpinning the modern LMT.
The module includes:
1. Priming debt and liens capacity(including structural, effective, contractual and temporal subordination)
2. Restricted Payments and Permitted Investments (both critical for understanding a borrower’s scope to transfer assets to Unrestricted Subsidiaries)
3. Asset Sales (heavily utilised by borrowers to buy time)
4. Buyback provisions, amendment provisions, payments for consent and more
There is even a checklist at the end of the module designed to leave no stone unturned in any doc review – whether you’re an existing lender analysing for defence, or an opportunistic player looking for an edge in.
If you haven’t yet looked at our online, on-demand covenant training platform, get in touch to schedule a demo and for access to our one-hour free taster course on covenants, itself an excellent resource for leveraged finance professionals.