LFI; By the Numbers: Largest Sponsors vs. Rest of the Field
In this report, Covenant Review looks at the extent to which the largest and most active Private Equity firms are able to secure more aggressive terms on M&A-driven loan agreements in the year-to-date than smaller sponsor groups and corporate issuers. The sample includes loans of single B issuers for which Covenant Review analyzed final documents—the few BB loans of recent vintage are excluded from the mix because these loans are naturally more issuer-friendly terms. To provide a comparison, we divide the sample into two categories: (1) loans from the largest and most active sponsors such as Apollo, Bain, Blackstone, Carlyle, CVC, KKR, TPG, and Vista (PEI’s full list is here) and (2) loans from less active sponsor groups and corporate issuers. Naturally, in any given period not all sponsors will have M&A-related executions to include in the data set.
As this table illustrates (please see our website), some terms are fairly universal. The primary purpose limitation to soft call provisions that limits the fees to just transactions designed to lower the loan’s pricing is one example. Others—for example MFN sunsets and asset sale sweep step downs—are largely reserved for the more active sponsors that tend to have the most leverage with the market players and tend to the larger and more widely syndicated deals.
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