With Memorial Day weekend approaching, beachgoers are not the only ones seeking shelter from the sun. Notwithstanding a seemingly de-escalating trade war, corporate borrowers continue to feel the impact of tariff-related cost pressures, diminishing cash flows, and ever-thinning covenant compliance margins. Thus far, lenders seem willing to help, as structural accommodations are increasingly common in a market looking to beat the heat:

  • Amend and Extend – mutual agreement to extend a loan’s maturity in exchange for more borrower-friendly terms (often interest rates), allowing borrowers to kick the bucket down the sand.
  • Covenant Relief – suspension of certain covenant testing for near-term periods, providing borrowers with much needed shade to avoid heat stroke and an event of default.
  • Temporary Carve-Out – temporary definitional adjustments to EBITDA for “one-time” incremental costs – a quick dip in the ocean to provide relief from tariff-induced margin compression.
Intrepid Market Update May 2025

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