In the last six months we have seen some sponsors on European deals successfully securing greater flexibility to incur further debt within their day one capital structure, in line with market practice in the US.

The traditional European syndicated loan market has left little flexibility for incurring further debt, using hard caps and a basic premise that the day one capital structure will be the capital structure for the life of the loan, and further debt cannot be added without permission from the banks.

However, players in the European leverage finance space are adopting US technology to bring greater flexibility, so that sponsors can add significant further debt into the structure based on a leverage ratio rather than hard caps.

While lenders are not offering this flexibility to every sponsor on every deal, lenders are increasingly comfortable with the idea for known sponsors on good credits. We are seeing this flexibility on the more popular transactions with bigger sponsors,where because of investor appetite, lenders want to participate with less pushback on terms.

While there are a number of technical issues that have to be considered in the documentation, much of the US terminology being used can be adapted to the European context, thereby allowing sponsors to avoid full recapitalisations and save money.

We've noted the development of a Eurodenominated, English law covenantlite market, as what has been a US product post 2008 now takes hold in the European financing marking. Like cov-lite loans, which dispense with financial maintenance covenants on the term debt, this is another example of the globalisation of the leveraged finance market, a trend we expect to see continue.