2024 European Leverage Loans Wrap: Liability Management Exercise Blockers Firmly Entrenched in Documentation Though Borrowers Gain More Outright Debt, Restricted Payment Capacities

Legal Analysts: Brian Conway, Ian Chin, Aaron Spence Data Visualization: Elisabeth Campbell   Key Takeaways   The surge in deal volumes seen in the first half of the year continued apace with the total volume of deals in 2024 doubling year over year. The market was dominated by add-ons and repricings, making up 60% of the deals by volume completed in 2024. “Day 1” capacities for debt incurrence and value leakage have increased year over year. Borrowers and sponsors are pushing for increasing capacities and flexibilities, but investors are standing their ground and pushing back on some of the more aggressive terms. There has been successful pushback on nine in every 10 deals in 2024 that were LBOs or full refinancings. This indicates that sponsors and borrowers are coming to market with a range of aggressive terms on these deals in the expectation that there will be pushback from investors and that some concessions will be made. J. Crew blockers and Chewy protection have now become firmly entrenched in European TLB documents. These lender protections have become must-haves for TLB investors, as dropdown transactions have landed firmly on the shores of the European market. Expectations for increased LBO, M&A activity[...]