Deborah Weinberg Tells Reorg that Private Credit Lenders Are Standing Firm on Financial Covenants Despite Competitive Market

Partner Deborah Weinberg was quoted in a Reorg article entitled “Private Credit Has Kept Up Strong Covenants Amid Competitive Market, Sources Say, but Covenants Are Beginning to Soften.” The article discussed that with the distinction in creditor protections provided by the private credit markets beginning to erode and competition ramped up between funds, some companies have been able to push back on certain covenants, depending on the size of the deal and credit quality.

Deborah, who advises companies with an average EBITDA ranging from $15 million to $25 million, said that financial covenants are still very present on every deal and always include standards such as maximum leverage and/or minimum fixed charge coverage ratios that are tested on a periodic basis. She said that “leverage also remains a key component for pricing debt, with step-downs in rate permitted if the borrower meets certain leverage levels, although some deals in the lower middle market have hardwired interest rates instead.”