H1’26 European Leveraged Loans Wrap: J.Crew, Serta Blockers Feature in All LBOs, Full Refinancings; Covenant Capacities Rise on Multi-Toggles; Change-of-Control Portability Back in Vogue

Legal Analysis: Aaron Spence, Brian Conway Data Visualizations: Elisabeth Campbell, Rafi Rees   Key Takeaways   LME protections widely accepted as standard: J.Crew and Serta blockers featured in every first-half 2026 leveraged buyout, or LBO, and full refinancing reviewed by Octus. The strength of these protections still varies though. Investors also continue to resist anti-cooperation provisions. Designed to block lender coordination in liability management exercises, or LMEs, these provisions surfaced in only one H1 2026 marketing term sheet and were stripped out after pushback, extending a run in which none of the recent attempts has reached final documentation. Rise in multi-toggles fuels an increase in day-one covenant capacities: Debt incurrence and value leakage capacities rose across the board relative to 2025, with particularly large increases for collateral dilutive debt incurrence and transfers to unrestricted subsidiaries. The rise in multi-toggle provisions that allow unused basket capacity under two or more covenants to be used interchangeably, are a likely driver. Capacities also ran looser in the first quarter than in a choppier second quarter, weighed down by the Iran-U.S. war and macro headwinds.   Change-of-control portability roars back in Q2: After tapering to 6% of deals in Q4 2025 and 10% in[...]