Default now or forever hold your peace
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True story: the other day I got a speeding ticket in the mail for going 31 MPH on a 25 MPH street, but here’s the craziest part:
I was driving on that street months ago and am only now getting the ticket...
It got me thinking: how far after a “transgression” is it OK to penalize a driver?🚦
"Temporal Limits on Default" in credit deals protect against exactly this risk for issuers—and our Q1 '25 data shows something remarkable:
- These terms appear in 16% of credit deals in Q4 '24.
- This is the highest level we've ever tracked.
Why does this matter? Without temporal limits, lenders can declare a default based on a minor breach that:
- Occurred years ago
- Was disclosed in reporting, and (3) they did nothing about at the time.
Most telling? This surge signals issuers preparing for stormy weather. Think of it as cheap insurance today that could pay big tomorrow—especially if refinancing debt, executing a liability management transaction, or fending off lenders trying to muscle their way to the front of the payment line when things get tight.
The message is clear: no one wants to get tickets in the mail for speeding three-years ago.
Download Noetica's complete for more.
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