Twenty is the new 50;
Cov-lite invasion continues into direct lending

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It’s no exaggeration that covenant-lite is invading direct lending. Market participants across the board say today’s cutoff is $20 million EBITDA, compared to $35-40 million pre-Covid, and $50 million prior to the Great Credit Crisis of ‘08.

Last week DLD covered a covenant-lite buyout financing for a borrower generating $22 million of EBITDA in the engineering and field services industry. Total leverage was 6.5x.