Private Lenders Offer Easier Terms to Lure Mid-Sized Borrowers

Direct lenders are increasingly giving up key investor protections and offering more favorable terms to mid-sized companies as competition between broadly syndicated and private debt markets heats up.

So-called covenant-lite structures on loans of less than $500 million are becoming more common amid a slowdown in the number of high-quality companies seeking funding. A cov-lite loan often will shun maintenance provisions that compel borrowers to periodically meet tests of financial fitness, and can give borrowers a better chance to refinance their debt without penalty.

Such flexibility traditionally was given to cash-rich companies borrowing $500 million to $1 billion or ...