Law firm Latham & Watkins notes in a report that the adoption of U.S.-style covenant-lite terms in European leveraged deals continues apace.

The firm said this is hardly surprising given the existence of ultra-low interest rates that are sparking intense competition for yield amongst financial investors. Sponsors and advisers are increasingly applying approaches from the U.S. leveraged loan and global high yield bond markets to European leveraged loans. Sponsor friendly terms are very much in fashion.

Latham & Watkins noted that covenant-lite loan financings are far from uniform in Europe at this stage, yet they continue to evolve gradually.