Tapping Incremental Debt Facilities To Increase Liquidity

Actionable Ideas for Companies and Sponsors

Tapping Incremental Debt Facilities To Increase Liquidity

Issuers adversely impacted by the effects of COVID-19 can shore up balance sheets and increase liquidity by utilizing the incremental debt capacity available through various baskets and carve outs in their loan agreements to issue additional debt. For some issuers, this can often be done without triggering MFN provisions by utilizing carveouts such as issuing secured bonds or varying maturity profiles.

We are currently working with several companies to enhance their liquidity through senior secured notes transactions. These companies have incremental debt baskets that permit them to raise pari passu secured notes without triggering the MFN yield provisions in their existing credit agreement. This solution provides these companies with an immediate liquidity boost while preserving the low interest rate pricing under their existing debt facilities.