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| Graph tracking Photo by Helloquence on Unsplash |
Aspen, Colorado-based Nikos Hecht gained prominence as the founding partner of a hedge fund that managed a multibillion-dollar portfolio of assets. A particular focus of Nikos Hecht was in identifying value to be gained through the processes of bankruptcy and restructuring.
A recent Financier Worldwide article brought focus to new dynamics informing companies’ restructuring approach. The background is one in which the retail sector is already experiencing major insolvencies and restructurings. Some 60,000 broader corporate bonds with an S&P rating of no higher than BBB are set to mature in 2020 and 2021.
At the same time, there has been a tenfold increase in covenant-lite loans from 2007 to 2018. This increased corporate flexibilities while providing pathways for decreasing transparency about financial condition, shielding value, and extending restructuring timeframes. Countering this, industry analysts are increasingly able to dive deep into debt documents and reveal what would otherwise be restricted.
With shareholder activism already well established in the United States, what this may lead to is debt activism, with equity investors seeking to influence stakeholder perceptions while taking a litigation-focused approach to moving restructuring processes forward in companies that would otherwise be protected by covenant-lite arrangements.
A recent Financier Worldwide article brought focus to new dynamics informing companies’ restructuring approach. The background is one in which the retail sector is already experiencing major insolvencies and restructurings. Some 60,000 broader corporate bonds with an S&P rating of no higher than BBB are set to mature in 2020 and 2021.
At the same time, there has been a tenfold increase in covenant-lite loans from 2007 to 2018. This increased corporate flexibilities while providing pathways for decreasing transparency about financial condition, shielding value, and extending restructuring timeframes. Countering this, industry analysts are increasingly able to dive deep into debt documents and reveal what would otherwise be restricted.
With shareholder activism already well established in the United States, what this may lead to is debt activism, with equity investors seeking to influence stakeholder perceptions while taking a litigation-focused approach to moving restructuring processes forward in companies that would otherwise be protected by covenant-lite arrangements.
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