State of Distressed: Bloomberg’s Diaz-Matos on LME Whack-a-Mole

“Even when you think you’ve patched the last three holes ... what does it matter that you actually blocked one, two, and three if the company can still get there through route four?” observes Alex Diaz-Matos, Bloomberg Intelligence senior covenant analyst, on the game of whack-a-mole between creditors and borrowers in today’s bloated credit agreements. In this episode of the State of Distressed Debt podcast, Bloomberg Intelligence analysts Phil Brendel and Negisa Balluku sit down with Alex to explore the cutthroat tactics in liability management exercises and how Aston Martin, Electronic Arts, Xerox and Optimum Communications have used IP, joint ventures and novel entity structures to raise financing and circumvent seemingly ironclad lender protections. The conversation also breaks down the unintended consequences of increasingly precise drafting, the limits of non-unanimous covenant protections and how the distressed market has evolved since Serta turned theoretical vulnerabilities into harsh reality. The podcast concludes (52:34) with Phil and Negisa providing a roundup of their latest distressed credit research on Optimum Communications, Dish Wireless, Hughes Satellite Systems and Getty Images.