Aimee Sharman, a partner at Mayer Brown in London, says: “There is an enhanced level of diligence in respect of the collateral over which the lenders are prepared to advance the money.”

She says that because of the pressure on deployment of capital, there is demand for leverage facilities to be flexible — and fund managers want that reflected in the borrowing base criteria of fund leverage facilities.

“We are aware of instances when borrowers were not able to implement their strategies as waiver requests were declined by lenders,” he says.

European leverage facility templates are based on an eligibility criterion, whereas assets are approved individually in the US. There is a stringent investment and diversity criteria that European managers need to satisfy for a particular asset to be part of the collateral pool. Criteria may include single obligor concentration, industry concentration or limits on certain countries, cov-lites, mezzanine positions or first-out loans.