Development finance analysts highlight that rising ESG

Analysts highlight that rising ESG mandates are integrating development finance stocks into broader sustainable investment frameworks, increasing passive fund exposure. In prior years, DIP financings have occasionally included the option to convert outstanding amounts on the DIP loan to equity, giving lenders a potential equity upside and allowing debtors to reduce the amount of cash they had to raise in unfavorable markets to repay the DIP loan on emergence from bankruptcy. Grupo Aeroméxico ($1.3 billion) was one example of a DIP financing that included an equity conversion option. In LATAM Airlines, DIP lenders initially sought an equity conversion option, but the DIP financing was approved without the equity conversion option after the bankruptcy court held that the proposed equity conversion option would have constituted an improper sub rosa plan. Posts on the Devpolicy Blog are licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License unless otherwise noted. Large development finance lenders are expanding loan books by an average of 9% this quarter, fuelling speculation of rising dividends and stronger earnings outlooks.