DISTRESSED DAILY: Revolver Draws Put Springing Covenants in Play

Drawing down your entire revolver -- something that more than 200 corporations have done recently -- could shore up liquidity during the coronavirus crisis. It could also put a company’s capital structure in play.

• Analysts at Xtract Research point out that nearly all covenant-lite deals include a springing covenant to protect creditors who provided the revolver and term loan A lenders. The debt could become due and payable immediately if the borrower fails a periodic test of its financial health, and some borrowers will be seeking a waiver and forbearance for at least the first quarter of 2020, Xtract says. ...