Key takeaway
Corporate credit is entering a more defensive phase. Lenders are negotiating stronger protections against liability-management transactions that can shift assets, collateral or repayment priority during periods of financial stress. The change matters for Georgia not because US credit structures can be copied directly, but because Georgia’s corporate bond market is expanding and contract quality is becoming more important alongside yield.
Why credit terms are getting tighter
For years, abundant capital and strong demand for higher-yielding assets allowed borrowers to negotiate relatively flexible credit documentation. When weaker companies later faced refinancing pressure, some used that flexibility to restructure outside formal bankruptcy. Transactions could move valuable assets beyond existing creditors’ reach, place new financing ahead of old debt, or favour selected lender groups.
Thomson Reuters’ Noetica data show how lenders have responded. J.Crew-style blockers were included in 15% of deals in Q1 2023 and 38% by Q2 2025, while anti-Serta protections reached 85% of deals in Q2 2025. The H1 2026 Capital Markets Radar Report describes a market moving further in lenders’ favour, even as borrowers retain flexibility in other economic terms.
The contract is becoming part of the credit thesis
Modern credit analysis therefore extends beyond coupon, maturity and headline leverage. Investors need to understand where collateral sits, whether additional debt can be incurred, whether guarantees can disappear, how voting thresholds work, and what happens to creditor priority under stress. Stronger covenants can improve protection, but they can also reduce a company’s operating flexibility.
The refinancing problem
Attention is increasingly focused on the 2028–2029 maturity wall. Moody’s September 2026 analysis, reported by The Wall Street Journal, points to late-cycle characteristics among weaker US borrowers as investors favour higher-quality issuers. Liability-management transactions and distressed exchanges can buy time, but they do not necessarily resolve underlying leverage and cash-flow weakness.
Georgia’s capital-market context
Georgia’s public corporate bond market is much smaller than the US leveraged-loan and high-yield markets, so direct comparison would be misleading. Yet the local market is growing rapidly. According to the National Bank of Georgia, public corporate bonds outstanding reached GEL 2.7 billion at the end of 2025, up 33.3% year on year. New public issuance reached a record GEL 1.58 billion during 2025. Around 66% of new issuance was denominated in GEL, and 54% of outstanding public corporate bonds were GEL-denominated at year-end.
The National Bank also reported that 79% of new issuance in 2025 came from rated issuers. Activity remained strong in 2026: by 20 August, seven issuers had placed 13 public corporate bonds worth about GEL 570 million in total, roughly 80% more than in the comparable period of the previous year.
What this means for Georgian investors
A high coupon is visible, but it is only the price of risk, not a complete description of it. Investors need to examine security and guarantees, restrictions on additional borrowing and asset transfers, disclosure obligations, events of default, creditor ranking and refinancing needs. A company can service interest comfortably today and still face material refinancing risk when principal falls due.
What this means for issuers
Stronger creditor protection is not only a constraint. Clear documentation can strengthen investor confidence and support more stable access to funding. The trade-off is flexibility: overly restrictive covenants can make acquisitions, investment, refinancing or crisis management harder. The goal is a structure that protects creditors against unexpected value leakage while leaving the company enough room to operate normally.
Where the opportunity lies
For Georgia, the opportunity is to link the growth of the corporate bond market with stronger documentation quality. As the issuer and investor base broadens, standardised disclosure, ratings, clear covenants and professional credit analysis become more important. This is particularly relevant for retail investors, who may see the coupon first but have fewer resources for legal and credit analysis than institutional investors.
Where the main risk lies
The main risk is that market growth outpaces investors’ understanding of increasingly complex documentation. A rating, collateral package or single covenant cannot eliminate credit risk. Protection depends on the borrower’s financial position, debt structure, documentation, information quality and the refinancing environment together.
BTU researchers’ assessment
BTU researchers assess that the main lesson for Georgia is not to copy specific US blockers, but to treat contractual architecture as an increasingly important component of market quality. As the local corporate bond market expands, competition can gradually move beyond coupon rates toward transparency, ratings, covenants, collateral and the practical enforceability of creditor rights.
Conclusion
Creditors are tightening rules because recent restructuring experience has shown that credit risk is not limited to whether a borrower can pay interest. It also depends on what a borrower can do with assets, new debt, guarantees and repayment priority when financial pressure rises. For Georgia, a deeper corporate bond market will require not only more issuance but also stronger understanding of documentation and investor protection.
Data and Main Sources
Source 1
Source name: The Wall Street Journal – Business & Finance – creditor protections and liability-management transactions, 28 September 2026
URL: https://www.wsj.com/
Dataset: No
Source 2
Source name: Thomson Reuters / Noetica – Liability management blockers and the arms race reshaping credit deals, 1 September 2026
URL: https://legal.thomsonreuters.com/blog/liability-management-blockers-credit-deals/
Dataset: No
Source 3
Source name: National Bank of Georgia – official capital-market updates, March and August 2026
URL: https://nbg.gov.ge/en/
Dataset: Yes
This material is analytical and educational in nature. It does not constitute financial, investment, tax or legal advice. Appropriate professional advice should be obtained before making a specific decision.
Prepared by the academic team of Business and Technology University and the BTUAI Research Team, Tbilisi, Georgia.