Christopher Robertson Quoted in The Distressed Debt Report
“Borrowers Win Eased Loan Covenants”

Christopher Robertson was quoted in the July 2009 issue of The Distressed Debt Report in the article, “Borrowers Win Eased Loan Covenants.” The article discussed the projected continuation of economic hardship and financial stress and how it is currently motivating lenders to loosen their covenants so that borrowers can avoid defaulting on their loans.

According to the article, several companies have asked their lenders to loosen their covenants, and in exchange, they have agreed to either extend the maturity of their loans or pay the banks more in interest. Some bankers have agreed not to raise a company’s borrowing cost as long as its debt-to-EBITDA ratio stayed under a new, higher limit. Chris noted, “The world has changed. Lenders are rethinking what metrics are needed to make sure their money is still secure. Some of the previous terms didn’t do the job.” Chris also noted that hotel and casino operators are especially susceptible to tripping debt covenants because those companies’ balance sheets are heavily dependent on real estate values. Assumptions for rising or even stable real estate values that were baked into covenants several years ago “have been turned on their heads.”