Cov-lite loans will lead to lower recoveries, says S&P
Covenant-lite loan agreements will lead to lower recoveries in the event of default, according to research published by Standard & Poor's on July 17.
The rating agency estimates recovery rates for cov-lite loans - where lenders give up some of the guarantees they have traditionally extracted from borrowers - are about 8-14% lower than for equivalent borrowers with full maintenance covenants.
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