Recent changes in cross-border leveraged loan documentation requirements open up new possibilities for both borrowers and lenders.

Cross-border leveraged loan documentation has become increasingly permissive with respect to third party debt, in some respects similar to high yield bonds, thus offering some previously unconsidered opportunities for specialist debt funds and special situations lenders. In a continued low-yield environment, careful consideration of these market developments, and the knowledge of how to utilize exceptions to covenants and other provisions in the leveraged loan and bond documentation, can open up possibilities for these lenders to offer a wider range of structured debt products to borrowers needing liquidity. This Client Alert revisits some of the key issues in special situations lending and identifies those areas where recent developments in leveraged loan and bond documentation create opportunities for special situations lenders.