The erosion of financial protections has spread throughout Europe's leveraged loan market, affecting lower to mid-market deals as well as larger €1bn-plus transactions, as sponsors seek greater flexibility to grow companies and protect their equity in more difficult times. The European loan market has largely accepted covenant-lite loans, having initially shunned the structures made popular in the US. European lenders were increasingly exposed to them with the emergence of a greater number of cross-border transactions in 2013, before an €818m loan backing the buyout of French veterinary pharmaceutical firm Ceva sante animale became Europe's first pure covenant-lite loan in 2014.
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