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With the backdrop of a deteriorating economy and continued tight lending conditions, middle market borrowers felt the full effects of the paralysis. Lending capacity deteriorated even further as some lenders were busy dealing with their own liquidity problems or reevaluating their portfolios, while others were lending selectively.
Amendments dominated activity, as issuers sought covenant relief from their lenders, who, in turn, received higher spreads and hefty amendment fees.
However, some signs of life have emerged in the primary market in the last few weeks.