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Is the Party Back On? Key European Covenant Trends 2024 

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Summary 

European leveraged loans and high-yield bonds saw a notable resurgence in 2024, nearly doubling issuance volumes compared to 2023. But what does this mean for the future of covenant trends and liability management exercises? 

Led by Aditya Khanna, Head of Legal Research at Mei Noctis, and joined by experts Bart Capechi, Brian Conway, and Shanks Qureshi from Octus, this webinar delivers a comprehensive overview of emerging covenant trends across Europe. With proprietary insights from Octus, the panel shared actionable intel on the market’s evolution and its implications for 2025. 

3 Key Takeaways from the Webinar 

  1. Rising Aggressiveness in Covenant Flexibility 

Covenant terms for European leveraged loans have seen a rise in aggressive provisions, driven by the resurgence of LBO activity and refinancing deals. Notable examples include the increased use of zero floors in builder baskets and super-grower baskets across loans and bonds. 

Data Insight: These provisions doubled in prevalence in the past two years. 

  1. Pushback from Investors 

Investors are pushing back more aggressively on calculation flexibilities, portability clauses, and value-leakage protections, highlighting shifts in negotiation power dynamics. 

Around 91% of all LBO and refinancing deals included some form of investor resistance in 2024. 

  1. Liability Management Exercises Hitting Europe 

European markets caught up to U.S.-style liability management exercises (LMEs), including dropdowns and uptiering techniques. With cases like Hunkemöller’s uptiering now entering litigation, Europe is witnessing a legal landscape in flux as these strategies gain traction. 

Interested in whether LMEs will become the dominant narrative for 2025? Watch the full recording to access detailed case insights and actionable predictions. 

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