What is the typical duration of a Revolver agreement before needing renewal?

A Revolver agreement typically has a duration of 3-5 years before needing renewal. This time frame is designed to provide borrowers with sufficient access to capital for short-term liquidity needs while minimizing the lender's exposure in longer-term commitments that could be influenced by changing market conditions or the borrower’s financial health.

The 3-5 year period allows both the lender and borrower to reassess the financial landscape and the borrower's performance at the end of the agreement, ensuring that terms can be adjusted based on current conditions. This length is well-positioned to balance the adaptability required in leveraged finance scenarios and the sufficient timeframe necessary for borrowers to utilize the facility effectively.

Longer durations, such as those over 10 years, are uncommon for revolvers due to the inherent risk and changing conditions in leveraged finance. Investments and borrowing needs typically fluctuate, making shorter renewals more suitable to mitigate risks for lenders while giving borrowers flexibility.