Chrysler deal hits tougher loan market
Source: MarketWatch - July 17, 2007
July 2007

Portfolio Manager Bradley Kane was quoted in an article by Alistair Barr on the fallout as investors push back ahead of a record $250 bln in borrowing for big buyouts.

Quoted from MarketWatch:

Earlier this year, investors searching for higher yields battled to invest in loans backing buyouts. That encouraged the growth of so-called covenant-lite loans, which give companies more leeway and creditors less power. But with so many big buyouts needing financing, investors are now pushing back by demanding more covenants and higher spreads.

"It's a concern, given the large amount of paper coming," said Bradley Kane, portfolio manager at SCM Advisors LLC, a [$12.7 billion] San Francisco-based investment firm specializing in fixed-income markets. "Deals will need to come with wider spreads and more covenants."

More covenants on the loans supporting Cerberus' Chrysler buyout "would be good credit enhancement from our perspective," Kane added. "But we always like more covenants."

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