Clifford Chance

Coronavirus: Investment Grade Lending: Immediate financing considerations for Borrowers, Underwriters and Lenders

19 March 2020

The global escalation of the Coronavirus (Covid-19) pandemic is likely to lead to an increased demand for working capital, even amongst investment grade corporate borrowers. Whilst the prevailing hope and expectation is that the current dislocation is temporary, interim liquidity needs may pre-empt new credit lines or utilisation of undrawn lines.

In addition the current climate may create potential disruption to routine reporting by borrowers and lead to enhanced information requests from lenders. Borrowers will want to carefully consider the impact of potential rating changes and the timing of any refinancings in terms of pricing more generally. Finally borrowers will want to carefully consider the impact of potential breaches and events of default, so as to approach their relationship lenders for any required consent or amendment well in advance of difficulty arising.

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