In 2012, a number of M&A transactions completed in 2006 – 2008 were re-financed and re-leveraged and we expect to see this trend of working through the refinancing "bulge" continue in 2013. In the case of many of such re-financings, sponsors sought to take some money off the table by re-financing and re-leveraging the acquired business after they had tested the market and were not content with what was on offer. In other cases, existing debt was simply re-financed and extended.
In the leveraged acquisitions space generally, the very significant level of cross-border participation on both the lender and the sponsor side has meant that developments in Canada have tended to generally follow developments elsewhere. The Canadian high yield market for leveraged acquisitions continues to mature, but is still constrained in size to mid-market transactions. Relatively robust flex provisions continue to be a feature of Canadian bank transactions, while "covenant lite" transactions are less common. Available leverage has again crept upwards and would appear to be approaching 2008 levels.
The market in Canada has also continued to evolve with specialty lenders increasing their presence and certain banks, particularly from Europe, reducing their presence. This has had an impact on the availability of longer maturities in the bank market.
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