Deal or no deal...or wait, where'd my chip go?
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The 56th annual World Series of Poker starts next week and at the beginning of the tournament, every player is told the same thing:
Green chips = $25
Black chips = $100
Blue chips = $500
Yellow chips = $1,000
Orange chips = $5,000
Dark Green chips = $25,000
Lavender chips = $100,000
Now, here’s the critical part: chip values don’t change while you’re playing at the table—if they did, it’d be pretty hard to win.
As absurd as it sounds: in 32% of capital markets deals in Q1, folks effectively permit chip values to change mid-game. Let me explain. 🃏
All lender consent for pro rata sharing terms in capital markets transactions effectively limit changes in pro rata sharing among lenders to unanimous consent. Without it, majority lenders could vote to pay themselves more of the issuer's payments with minority lenders getting less—in other words, lenders thought they had a lavender chip that turns out to be a green chip.
The numbers for Q1 ‘25 tell an intriguing story:
- These protections appeared in only 68% of deals in Q1 '25
- That's up from Q4 '24, but still below the 81% peak in Q2 '24
- Over the past two years, these terms have consistently been in at least ~60%
Not all deals need this protection—single-lender facilities and bridges get a pass. But in true syndicated deals? It's a basic protection for lenders.
Download Noetica's complete for more.
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