FAQ

Octus is the the leading provider of global credit intelligence and data for the world’s leading investment banks, asset managers and hedge funds, law firms and professional services advisory firms. By surrounding unparalleled human expertise with proven technology, data and AI tools, Octus unlocks powerful truths that fuel decisive action across financial markets. Visit octus.com to learn how we deliver rigorously verified intelligence at speed and create a complete picture for professionals across the entire credit lifecycle. Stay current with Octus on LinkedIn and X.

The Octus platform is designed for a wide range of financial and legal professionals, including buy side firms, law firms, investment banks and advisory firms. Users rely on Octus for timely, in-depth intelligence on credit events, from deal origination and primary issuance to performing, stressed and distressed credit.

We combine proprietary research, expert legal and financial analysis, and real-time data feeds to offer comprehensive insights. Our team of financial analysts, legal experts, data scientists, technologists and reporters work to provide accurate, actionable intelligence.

A subscription provides access to real-time news alerts, in-depth financial and legal analysis, data across primary, performing, stressed and distressed credit markets, proprietary data sets of companies and analytical tools to track credit events.

Yes, Octus offers customizable alert systems that allow users to receive updates based on their specific interests, whether it’s a certain sector, market event or company. This ensures that users receive the most relevant and timely information.

Broadly syndicated loans are large loans provided by a group of lenders, usually arranged by one or more financial institutions. These loans are typically used by large companies for purposes like acquisitions or refinancing and are distributed among multiple investors to share the risk.

A CLO (collateralized loan obligation) is a form of securitization where payments from multiple middle sized and large business loans are pooled together and passed on to different classes of investors in various tranches.

CLO data refers to the financial and operational metrics related to collateralized loan obligations. This includes information on the underlying loans, their performance, cash flows, and the risk profiles of the different tranches.

A covenant is a promise, agreement, or contract between two parties. As part of the covenant, the two parties agree that certain activities will or will not be carried out. 

Covenants in the context of credit refer to contractual agreements or clauses included in loan or bond agreements that outline specific conditions and restrictions imposed by lenders or bondholders on borrowers to protect their interests and manage risk. These covenants serve to safeguard the lender’s or bondholder’s investment by defining the parameters within which the borrower must operate, ensuring that they maintain financial stability and fulfill their obligations. Common types of covenants include financial covenants, which require borrowers to meet certain financial performance metrics such as debt-to-equity ratios or minimum liquidity levels; and restrictive covenants, which limit the borrower’s ability to take certain actions like incurring additional debt, paying dividends or selling assets without prior approval. Covenants provide lenders with mechanisms to monitor the borrower’s financial health and take appropriate action in case of non-compliance, thereby reducing the risk of default and protecting the lender’s investment.

The debtor in a chapter 11 case who remains in possession and control of its assets and business operations, unless replaced by a chapter 11 trustee. The DIP has all the powers of a bankruptcy trustee, including avoidance powers, as well as a variety of duties, obligations, and fiduciary responsibilities to the court and creditors.

Debt advisory services involve advising companies on how to structure and manage their debt. These services include negotiating loan terms, optimizing capital structures and helping companies find the best debt solutions for their specific needs.

DCM refers to the marketplace where companies, governments and institutions issue debt securities such as bonds to raise capital. DCM allows organizations to borrow money from investors by issuing debt instruments.

Direct lending refers to a financing arrangement in which a lender, typically a non-bank entity such as a private equity firm, specialty finance company or hedge fund, provides loans directly to borrowers without intermediaries like banks. This form of lending involves a direct contractual relationship between the lender and the borrower, often bypassing traditional banking institutions. 

Direct lending can encompass various types of debt instruments, including term loans, mezzanine financing and asset-based lending, and it can cater to a wide range of borrowers, from small and medium-sized enterprises (SMEs) to large corporations. This approach offers borrowers access to capital outside the traditional banking system, providing flexibility in terms of loan structures, repayment schedules and covenants, while also allowing lenders to pursue potentially higher returns compared to traditional investment avenues.

Distressed credit refers to debt securities issued by companies or entities experiencing financial distress or facing imminent default on their obligations. These securities are typically characterized by lower credit ratings, often below investment-grade status, and may include bonds, loans or other debt instruments. Distressed credit arises from various factors such as declining revenue, high debt burdens, operational challenges or macroeconomic downturns, leading to increased uncertainty about the issuer’s ability to meet its financial obligations. 

Investors in distressed credit may seek opportunities to profit by purchasing these securities at discounted prices, anticipating a potential recovery or restructuring of the issuer’s financial position. However, investing in distressed credit entails significant risk due to the heightened likelihood of default and the complexities associated with navigating the restructuring or bankruptcy processes, making it a specialized area within the broader credit markets.

Distressed debt investing involves buying the debt of companies in financial distress, typically at a steep discount. Investors aim to profit from the company’s recovery or from the restructuring process, which can increase the value of the debt.

Distressed securities news covers updates and analysis related to distressed debt, including corporate bankruptcies, restructuring efforts, and distressed asset sales. This news helps investors stay informed about opportunities and risks in the distressed debt market.

The dividend ratio, or dividend payout ratio, is the percentage of a company’s earnings that are paid out to shareholders as dividends. It is calculated by dividing the total dividends by the company’s net income.

ESG reporting in the context of credit refers to the disclosure of environmental, social & governance (ESG) performance metrics by borrowers to lenders and investors as part of the credit assessment process. This reporting framework allows borrowers to communicate their sustainability initiatives, risk management practices, and corporate governance structures to creditors, enabling them to evaluate the potential creditworthiness and financial stability of the borrower beyond traditional financial metrics. 

ESG reporting in credit analysis considers factors such as carbon footprint, social impact, diversity and inclusion policies, board composition, executive compensation structures and adherence to ethical standards. By incorporating ESG criteria into credit assessments, lenders and investors aim to better understand the long-term risks and opportunities associated with their investments, promote responsible lending practices and encourage borrowers to adopt sustainable business practices that align with environmental and social objectives.

ESMA Article 7 reporting refers to the regulatory requirement established by ESMA under Article 7 of the European Market Infrastructure Regulation (EMIR). This regulation mandates certain entities, primarily financial institutions and counterparties involved in derivatives transactions, to report specific details of their derivatives transactions to trade repositories. 

ESMA Article 7 reporting aims to enhance transparency, mitigate systemic risk and facilitate regulatory oversight of the derivatives market by ensuring that relevant information regarding these transactions is captured, recorded and made available to regulators. The reporting obligations typically encompass details such as the parties involved, the type of derivative, its notional value, maturity date and the underlying assets or indices. Compliance with ESMA Article 7 reporting requirements is essential for entities subject to EMIR to fulfill their regulatory obligations and avoid potential penalties for non-compliance.

ECM refers to the financial markets where companies raise capital by issuing shares of stock. These markets provide a platform for companies to obtain funding from investors through initial public offerings (IPOs) or other equity transactions.

Fundamental data refers to the essential quantitative and qualitative information about a company that is used to assess its financial health, performance and prospects for future growth. This data typically includes financial statements such as income statements, balance sheets and cash flow statements, which provide insights into the company’s revenue, expenses, assets, liabilities and cash flows. Additionally, fundamental data encompasses non-financial metrics such as market share, industry trends, management quality, competitive positioning and growth prospects. Investors and analysts rely on fundamental data to evaluate the intrinsic value of a company, assess its financial stability and make informed investment decisions. By analyzing fundamental data, stakeholders can gauge a company’s profitability, liquidity, solvency, efficiency and overall health, helping them to identify investment opportunities and manage risks effectively in the financial markets.

High-yield bonds, often referred to as “junk bonds,” represent debt securities issued by companies or entities with lower credit ratings, typically below investment-grade status as assessed by credit rating agencies like Moody’s or Standard & Poor’s. These bonds offer higher yields than investment-grade bonds to compensate investors for the increased risk of default associated with the issuer’s weaker financial position or uncertain prospects. High-yield bonds can encompass a diverse range of industries and sectors, including companies undergoing restructuring, those with limited operating histories, or those operating in volatile or cyclical markets. Investors in high-yield bonds  accept the potential for higher returns in exchange for the greater risk of default, with the understanding that these bonds may exhibit higher volatility and greater sensitivity to economic downturns or adverse market conditions compared with investment-grade securities.

Leveraged finance refers to a segment of the financial market where companies or investors use significant amounts of debt to finance business activities or investments, often with the aim of achieving higher returns. This strategy involves borrowing funds to increase the potential profitability of an investment or to fund corporate activities such as mergers and acquisitions, recapitalizations or leveraged buyouts. Leveraged finance transactions typically involve borrowers with lower credit ratings or higher levels of debt relative to their assets or earnings, making them more susceptible to default risk. These transactions may include syndicated loans, high-yield bonds, mezzanine financing and other debt instruments structured to provide capital to companies with limited access to traditional sources of financing. While leveraged finance can amplify returns, it also entails higher levels of financial risk, requiring careful evaluation of creditworthiness, market conditions and the ability to service debt obligations.

Leverage debt is debt that is used to amplify the potential return on an investment by borrowing funds. Companies often use leverage debt to finance acquisitions or expand operations, increasing both their potential gains and risks.

In the realm of credit, LBO stands for leveraged buyout, which refers to a financial transaction where a company is acquired using a significant amount of borrowed funds, typically secured by the assets of the acquired company and the expected cash flows generated by its operations. In an LBO, a private equity firm or investor acquires a controlling stake in the target company, often with the goal of restructuring its operations, reducing costs and improving profitability to realize a return on investment. The debt used to finance the acquisition is typically repaid using the cash flows generated by the acquired company or through asset sales. LBOs are characterized by the high level of leverage employed in the transaction, which amplifies both potential returns and risks for investors. These transactions require careful due diligence and financial modeling to assess the target company’s ability to service its debt obligations and generate sufficient cash flows to support the transaction structure.

A leveraged loan is a type of loan extended to companies or individuals that have considerable amounts of debt or poor credit history. Lenders consider leveraged loans to carry a higher risk of default, and as a result, are more costly to the borrowers. Leveraged loans have higher interest rates than typical loans, which reflect the increased risk involved in issuing the loans.

A leveraged loan is structured, arranged and administered by at least one commercial or investment bank. These institutions are called arrangers and subsequently may sell the loan, in a process known as syndication, to other banks or investors to lower the risk to lending institutions.

Liability management transactions are strategies used by companies to restructure their debt obligations. This can include actions like refinancing existing debt, repurchasing bonds or extending maturities to improve a company’s financial stability.

The Global Industry Classification Standard (GICS) is an industry analysis framework that helps investors understand the key business activities for companies around the world. MSCI and S&P Dow Jones Indices developed this classification standard to provide investors with consistent and exhaustive industry definitions.

Municipals, in the context of credit, refer to debt securities issued by municipalities, local governments or related entities to finance various public projects and infrastructure initiatives. These securities, commonly known as municipal bonds or “munis,” are typically exempt from federal income taxes and may also enjoy tax exemptions at the state or local level, making them attractive to investors seeking tax-advantaged income. Municipals encompass a wide range of issuers, including cities, counties, school districts, utilities, transportation authorities and other governmental entities, each with its own credit quality and risk profile. Municipal bonds may be general obligation bonds backed by the issuer’s full faith and credit or revenue bonds secured by specific revenue streams generated by the financed projects. Investors in municipals assess credit risk based on factors such as the issuer’s financial health, economic conditions, tax base and legal structure, with higher-rated bonds typically offering lower yields but greater safety of principal and interest payments.

Origination in the context of credit refers to the process by which a financial institution, such as a bank or lender, initiates and completes a new loan or credit agreement with a borrower. This encompasses all stages from the initial application to the approval and disbursement of funds.

During origination, the lender assesses the borrower’s creditworthiness, including factors such as credit history, income, assets and debt-to-income ratio, to determine the terms and conditions of the loan, including the interest rate, repayment schedule and any applicable fees. Origination involves gathering and verifying relevant documentation, conducting risk assessments and ultimately extending credit to eligible borrowers. It is a critical phase in the lending process as it sets the foundation for the ongoing relationship between the borrower and the lender, impacting both parties’ financial outcomes.

Performing credit refers to a financial instrument or loan that is currently meeting its repayment obligations according to the agreed terms and conditions. In the context of lending, it indicates that the borrower is making timely payments of principal and interest, demonstrating their ability and willingness to fulfill their financial obligations. Lenders often classify loans or investments as performing credit when there is  no significant indication of default or credit deterioration, thus presenting lower risks for investors or financial institutions. This status is crucial for assessing the creditworthiness of borrowers and managing the overall risk profile of a portfolio.

Private company data refers to the financial and operational information of privately held companies. Unlike public companies, private companies are not required to disclose detailed financial information, so this data is often obtained through specialized financial research tools.

Private credit refers to debt financing provided by non-bank lenders, such as private equity firms, hedge funds, asset managers and specialty finance companies, to borrowers who may not have access to traditional bank loans or capital markets. Unlike public debt, which is traded on public exchanges, private credit transactions are negotiated directly between lenders and borrowers and are not typically subject to regulatory disclosure requirements. Private credit encompasses a wide range of debt instruments, including senior secured loans, mezzanine financing, distressed debt and structured credit products, tailored to the specific needs and risk profiles of borrowers. Private credit providers may offer flexible terms, customized structures and faster execution compared with traditional lenders, making it an attractive financing option for companies seeking capital for growth, acquisitions, recapitalizations or other strategic initiatives. Investors in private credit seek to earn attractive risk-adjusted returns by lending to creditworthy borrowers while diversifying their portfolios away from public markets and traditional fixed-income securities.

Sub-investment grade credit refers to debt securities or bonds that carry ratings below investment-grade status as assigned by credit rating agencies, indicating a higher risk of default. These securities, often referred to as speculative-grade or junk bonds, are issued by entities with perceived weaker financial health and creditworthiness. Ratings for sub-investment grade credit typically range from BB and Ba (moderate risk of default) to C or D (high risk of default or already in default). Investors in sub-investment grade credit demand higher returns to compensate for the increased risk, although investing in these securities can potentially yield higher returns for those willing to accept the heightened risk. However, careful assessment of the issuer’s credit quality and consideration of individual risk tolerance are essential before investing in sub-investment grade credit securities.

A syndicated loan is a form of financing that is offered by a group of lenders. Syndicated loans arise when a project requires too large a loan for a single lender or when a project needs a specialized lender with expertise in a specific asset class.

Syndicating allows lenders to spread risk and take part in financial opportunities that may be too large for their individual capital base. Lenders are referred to as a syndicate, which works together to provide funds for a single borrower. The borrower can be a corporation, a large project, or a sovereign government. The loan can involve a fixed amount of funds, a credit line or a combination of the two.

An unsecured creditor refers to an individual or entity that extends credit to another party without obtaining collateral or security for the debt. Unlike secured creditors who have a claim on specific assets of the debtor in the event of default, unsecured creditors rely solely on the debtor’s promise to repay the debt according to the terms of the agreement. Examples of unsecured creditors include suppliers, vendors, trade creditors and bondholders. In the hierarchy of creditors’ claims in bankruptcy proceedings, unsecured creditors typically have lower priority than secured creditors and may receive partial or no repayment if the debtor’s assets are insufficient to cover all outstanding debts. Unsecured creditors assume a higher level of risk relative to secured creditors but may benefit from potentially higher interest rates or other terms to compensate for this risk.