Lots of Noise About Cov Lite Loans

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Lots of recent clamoring on this topic as the cov-lite trend is dominating the US and now infecting Europe. Choice quote, "This year, 70% of the region’s new leveraged loans are known as covenant-lite, according to LCD, more than triple the number four years ago." Sounds like there is a lot of money chasing very few deals. Covenants are falling and pricing is increasing (yield baby!), with recent PE leverage ratios exceeding loan underwriting guidelines. Deutsche Bank warns, "We're overdue a correction." Interestingly, we noticed a strange parallel this week in the venture capital space where, suddenly, after a long lapse in talk about "bubbles," notable investors like Fred Wilson and Brad Feld wrote about dealing with a crash/collapse. You'll recall that Howard Marks wrote about cov-lite a few weeks ago in the midst of expressing caution. Perhaps we'd better launch our ICO soon before the window closes.

Notable (Cov Lite Loans, Delaware Bankruptcy Filings & More)

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More = Busted Tech, Investment Banks & REITS

Biglaw. Summer Associate satisfaction surveys (firewall). In case anyone actually gives a sh*t.

Busted Tech. A view that recent IPOs will never make money. Meanwhile, Toys R Us is a harbinger of, you guessed it, BUSTED TECH. 

Canadian Retail. Also looking increasingly ugly.

Cov Lite. We're old enough to remember when people said it was dead and would never come back. Memories are short AF. 

Delaware. This article about retail bankruptcy cases avoiding filing in Delaware misses the mark widely. Like, way outside. Any DE practitioners want to opine - without attribution - on this?? Email us here.

Investment Banking. Jefferies can't trade for sh*t but advisory fees baby. Given these advisory fees, it looks like UBS wants to get back into the restructuring advisory game. Again. For, like, the 283th time. 

J.Crew. Investors are pissed.

New York. Is it in danger of becoming Detroit?

Puerto Rico. The hits just keep on coming. Sad, really.

REIT Investments. This is an interesting piece about alternative investments by REITS. Simon Property Group ($SPG) looks particularly active.

Retail (Taxes). When you're industry is in secular decline, fight for scraps. Here, tax changes.

News for the Week of 01/15/17

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  • Canada. Predicting lots of doom and gloom.
  • Covenants. Some developments in the capital markets thanks to recent activity with makewhole provisions - including "the end of covenants?". 
  • Fees. It was only a matter of time before there was a new chapter in the always inevitable vilification of restructuring professionals due to fees. Instead of a front page story about Lehman or TXU in the WSJ, here the Houston Chronicle highlights oil and gas cases.
  • Fund Performance. Bloomberg does IR work for Brigade Capital Management, highlighting the asset management company's purported big '16. And for Mudrick Capital, noting the fund's turnaround after a period of high profile poor performance.
  • Let's Get Technical. For you geeks who love worrying about CDS, high yield bonds and liquidity, this report is for you.
  • Municipal Trouble: we've talked about Dallas in the past and now Providenceis in the crosshairs.
  • North Dakota: In a shocking development, the state's forecasts did not account for the upheaval in the energy space: just a mere billion short.
  • Radio. Pros focused on radio-based media situations ought to take note of what is happening in Norway, which is now the first country to completely switch off its FM radio network and convert entirely to digital. Meanwhile, in the streaming music space, Soundcloud bankruptcy rumors continue to increase (we called it).
  • Sears. We're tempted to run a pool to gauge when this sucker FINALLY files for bankruptcy but like the villain in Die Hard, Lampert will probably find a way to keep the thing coming back.
  • Rewind I: Garden Fresh Restaurant has sold to Cerberus Capital Management in bankruptcy. Sun Capital's pain is Cerberus' gain. Speaking of Sun Capital, it seems they made out okay with their Limited investment thanks to distributions and dividends. To summarize, they made 1.8x their initial $50mm investment. And 4000 people are losing jobs.
  • Rewind II: Gilden Activewear Inc. will acquire American Apparel for $88mm, a premium to the original stalking horse bid. Meanwhile, Nasty Gal received approval to sell its brand and customer information for $20mm. Wet Seal, meanwhile, looks headed towards a Chapter 22 at best and a liquidation at worst - not long after Versa Capital bought it out of bankruptcy for $7.5mm.
  • Rewind III: Jawbone continues to struggle as the wearables space continues to consolidate.
  • Chart of the Week: 
  • Tweet of the Week: