Ex ante measures to avoid collateral skirmishes have proven elusive. In the low-interest environment that has existed over the last 10 years, bondholders have been willing to go along in exchange for higher yields.

But sponsors have successfully negotiated for “loose” debt contracts that preserve the optionality that is often necessary in the precarious post-LBO world. Bondholders could demand the inclusion of provisions to better protect their positions and reduce the risk of equity sponsor gamesmanship. Panel 2: Contracting Complexity and the Rise of Shadowed Practices: How Private Equity Dictates Outcomesīrief Description : Debt instruments fail to address and resolve the most challenging disputes between parties, despite their increasing length and complexity.

Moderator: Katherine Waldock, Millstein Center at Columbiaġ0:45 to 12:15 p.m. This panel will address these questions while laying the empirical groundwork for distressed debt markets that will inform the panels that follow. They also raise the broad question about the gradual shift from bonds to loans in riskier debt markets. These market features raise questions about whether leveraged loans are more susceptible to fire sales and potentially lead to differences in the bargaining process during distressed work-outs and restructurings. Although banks still hold a majority of leveraged loans, NBFIs are significant market participants, particularly in the non-investment grade loan sector. high-yield bond market – roughly $1.6 trillion in amounts outstanding – in 2021. leveraged loan market, which stood at just over $100 billion two decades ago, caught up to the size of the U.S.

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