PE Views: Could PE Benefit From the Universal Adoption of Super Senior RCFs in Leveraged Financings?

Please get in touch with the team at Latham & Watkins through this form

Latham & Watkins

Name *

First

Last

Email *

Tele.

Company Name *

Company Website URL

Message *

The more detail you offer the better we can respond

GDPR Agreement *

• I consent to having my information processed for the purpose of responding to my inquiry

Further Communications

• I am happy for Latham & Watkins to place me on their contact list for further communications

Submit

Undrawn revolving credit facilities (RCFs) serve as essential parachutes to private equity. They are a backup in the event of mismatches in the working capital cycle, they provide comfort for a rainy day, and they preserve swift access to deal-making when other financing sources are unavailable, or less easily accessible. The COVID-19 pandemic clearly proved the importance of undrawn RCFs to private equity. At the onset of the pandemic, credit markets gummed up and businesses worldwide grappled with evaporating liquidity, while leveraged companies dashed for cash and drew revolving lines.

In this episode of Connected With Latham, London private equity partner Tom Evans speaks to London capital markets partner Francesco Lione on how elevating RCFs to “super senior” status could correct the imbalance between high demand by private equity and short supply by banks.