One of the big stories of the financial crisis was the apparent rise in stature of bondholders vis-à-vis financial sponsors.

In the heyday of private equity deals, the former had became accustomed to terms that could hardly be deemed investor-friendly. The crash led to a lot of talk about how the ship had been righted from a bondholder point of view, as the death of covenant-lite loans seemed to be at hand. But has the power pendulum already moved back in favor of private equity firms?

TheDeal.com notes the case of Delphi Automotive's $1 billion senior notes issue, which was designed to repay part of Delphi's debt under a previous credit agreement. "But buried in the indenture outlining the covenants was a carve-out that allows for ‘unlimited restricted payments,' that is, dividends."

The carve out was first noted apparently by covenant research firm Xtract Research.

"While on the rise, these unlimited dividend provisions still would not be considered a ‘market' term, or one that appears in agreements almost by default. But what has become relatively standard is something called a "build-up basket," which allows the company to leverage up for uses like acquisitions or other investments. The build-up basket permits a company to pile on debt as long as a secured leveraged test is met," which in some cases wouldn't necessarily be difficult.

Whether this signals a big reversion to previous practices is hard to say at this point, but it's worth noting.

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