Covenant-Lite Issuance Casts A Cloud Over Future Default Levels

With the current hyper-liquidity in the capital markets, largely due to central bank “cheap-money” policies, and investors’ unquenchable thirst for yield, the issuance of covenant-lite first-lien loans, which lack financial maintenance covenants, has boomed in 2013 and thus far in 2014. Standard & Poor’s Ratings Services is concerned that the sizable amount of first-lien covenant-lite loans now outstanding, particularly those rated in the ‘B’ category, along with rapid growth in traditional ‘B’ first-lien loan issuance, could result in elevated refinancing risk and/or a spike in defaults in the event of a future liquidity crisis. (Watch the related CreditMatters TV segment titled, “Booming ‘B’-Rated Covenant-Lite Issuance Heightens Restructuring And Default Risk,” dated July 15, 2014.)



The Association of International Wealth Management of India (AIWMI) is a not-for-profit organization and a globally recognized membership association for finance professionals. AIWMI primarily focuses on the broad and strategic role of developing a more robust and forward-looking training infrastructure for the financial services sector and to promote more active industry involvement and collaboration in training and continuing education. AIWMI is offering advanced international certification programs along with a wide variety of high-quality executive education programs. AIWMI programs combine state-of-the-art knowledge and skills with practical experience and insights into the functioning of the financial sector. All AIWMI courses and educational events have an intense and pragmatic curriculum. Participants are exposed to the latest developments within the financial services sector. AIWMI plays a key role in guiding the development of the financial services sector. AIWMI works with key industry participants’ viz. the Government, the Regulators, the Industries/Associations, the Corporate, the Media and the General Public to achieve its objectives. Besides enhancing technical competence and professionalism in the industry, AIWMI organizes events and facilitates discussions to promote best practices in leadership and talent development in the financial sector with an aim to become Asia’s premier center of excellence for financial education.

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