A Liability Management Prime-r

Since the last financial crisis, stakeholders changed the way they approached issues with corporate liquidity. Markets in the United States and Europe are now undergoing a period of intense "liability management" activity – often referred to as "LMEs" (liability management exercises) or "LMTs" (liability management transactions). From a borrower's or issuer's perspective, LMEs may offer an opportunity to remedy mismatches in capital structures and provide the borrower additional liquidity in the hopes of turning its business around. For lenders, an LME re-adjusts their exposure and has the potential to provide them with access to additional collateral or improve their priority in a distribution waterfall. On the other hand, an LME also provides the potential to be left behind: for a lender to be primed by new, more senior debt, or a borrower group or collateral package materially different from when the credit was initially put in place.