Thomson Reuters Law Blog

Highlights

Incremental debt terms typically require that new debt not mature earlier than existing debt, protecting original lenders' place in line. 'Inside maturity' baskets carve out an exception, letting a portion of incremental debt mature before the existing debt. Across a sample of 86 high-yield credit agreements in Q3 2023 and 53 in Q3 ...

Highlights

Automatic guarantee releases let subsidiary guarantors drop their guarantee the moment they stop being wholly owned — sometimes triggered by transferring just one share. Automatic release prevalence jumped from 3% of deals in Q3 2023 to 17% in Q3 2024. 'Anti-PetSmart' protections against this loophole grew alongside it, from 5% to 1...

Highlights

Change of Control Portability lets a borrower avoid an event of default when ownership changes, effectively transferring the loan to a new owner without lender consent. The term appeared in 13% of publicly filed high-yield credit agreements in Q3 2024, up from 10% in Q3 2023. 'Affiliate transfer portability' now accounts for the ent...

Highlights

IP transfer prohibitions now appear in 24% of deals; unrestricted subsidiary designation restrictions appear in 23%. Only 12% of deals include both protections together — full J.Crew blocker coverage. A deal with only one protection still leaves a path open: restrict the transfer and a borrower can still designate the subsidiary; re...

Highlights

Special Mandatory Redemption terms require an issuer to buy back acquisition-financing bonds if the underlying deal falls through. Some SMR terms require redemption at par; others carry a premium, often around 101% of face value. Kroger issued $10.5 billion in bonds to fund its Albertsons acquisition, with $4.8 billion carrying a 10...