The closure of Britain’s pubs amid the Covid-19 pandemic is hurting not just the nation’s drinkers but also the companies that own them and the lenders who back them.

Marston’s Plc, owner of about 1,400 pubs including the Pitcher & Piano brand, and Mitchells & Butlers Plc, with about 1,700 pubs including All Bar One, both agreed temporary waivers with creditors this month because pub closures risked breaching debt terms. If the lockdown lasts much longer, the companies may be at risk of breaching meaningful covenants on their debt.

“Depending on the length of the shutdown we can expect more significant waiver requests concerning financial covenants in time,” said Martin Foden, head of credit research at Royal London Asset Management which holds some pub debt.

Spokeswomen for Mitchells & Butlers and Marston’s declined to comment for this article.

There’s little light at the end of the tunnel. Social distancing will be needed until at least the end of the year to prevent fresh outbreaks, Chris Whitty, the U.K.’s Chief Medical Officer said this week. In response, the British Beer & Pub Association warned that pubs will be lost if the government doesn’t provide special support for them to reopen.

“Trade will not immediately return to the level it was before the Covid-19 crisis hit,” Emma McClarkin, chief executive of the association, said. “Upon reopening, trade could be down by as much as half what it was before.”

From the 1990s onwards, many pub companies issued highly-rated, long-term debt that was backed by cashflows from the pubs themselves. The notes have strict covenants designed to keep cash in the structure, according to CreditSights.

Some of these securitizations came unstuck with the smoking ban and the availability of discounted alcohol at supermarkets, part of the reason Punch Taverns restructured its debt in 2014.

Lately the notes have become more attractive with a spate of mergers and acquisitions including Hong Kong billionaire Li Ka-Shing’s purchase of Greene King last year and Stonegate’s acquisition of Ei Group. Moody’s Investors Service downgraded debt ratings on Mitchells & Butlers and Punch Taverns this week.

Now the lockdown looks set to turn things sour for investors. S&P Global placed debt from pub companies including Marston’s, Mitchells & Butlers and Greene King on negative watch this month, signaling downgrades are likely as the shutdown restricts cash flows.

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