Which loan terms
leave room for an LME?
Compare credit agreements to understand where borrowers have flexibility, which rights protect lenders, and whether those differences help predict a liability management exercise.
Start with what the borrower could do
Could it move valuable assets, raise debt with better priority, or change other lenders’ rights? The answer depends on how the agreement’s provisions work together.
Similar wording can produce different lender rights
Document comparison helps locate relevant language. An analyst must then read the definitions, exceptions, and related provisions to assess what the borrower could do. Predicting whether it will act also requires evidence about its finances, incentives, and creditors. A close text match alone establishes neither legal permission nor the likelihood of an LME.
This guide adapts the private-equity paper’s research approach to U.S. corporate leveraged loans. The paper did not test credit agreements, and the proposals here have not been tested on a credit dataset. Asset-based facilities, subscription lines, NAV loans, and project finance require separate definitions and validation.