“Oyo Hotels, one of India’s most valuable startups, is offering unusually generous terms to investors as it seeks to raise US$600 million in debt, following a fresh surge of coronavirus cases in its home country that decimated travel and undercut its recovery plans,” Bloomberg reported.

Details:

• Oravel Stays, the company's parent company, is in negotiations with banks and investors over a five-year term loan B at 850 basis points over LIBOR, which is higher than the usual guidance for this kind of facility in Asia-Pacific.
• Maintenance covenants are often used in the bond, and are measures that are often put in place for businesses that are deemed unsafe by investors.

Context:

• The news comes as the number of regular Covid-19 cases in India has risen dramatically in May, with over 400,000 cases reported at the start of the month.
• Oyo also announced that relatives of workers who died as a result of the outbreak would get eight months' pay and other bereavement compensation. It has implemented a four-day work week to assist employees in dealing with the pandemic.