Springing covenant: Difference between revisions

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(Loan covenant which is conditional)
 
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A covenant in a loan agreement which becomes effective on the occurrence of a certain event in the future. Used to enable loan agreements to have lite covenants, typically to conform to other loans of the same borrower. A common springing event is the level of utilisation of a loan facility at which time covenants such as ICR and gearing come into effect.
''Long term funding''.
 
A covenant in a loan agreement which becomes effective on the occurrence of a certain event in the future. Used to enable loan agreements to have fewer and less onerous ('lite') covenants, typically to conform to other loans of the same borrower.  
 
A common springing event is the level of utilisation of a loan facility at which time covenants such as ICR ([[interest cover]] ratio) and [[gearing]] come into effect.
 
Springing covenants are a form of [[contingent covenant]].
 
 
 
== See also ==
*[[Covenant]]
*[[Covenant-lite]]
*[[Incurrence covenant]]
*[[Maintenance covenant]]
*[[Springing term loan]]


[[Category:Long_term_funding]]
[[Category:Long_term_funding]]

Latest revision as of 06:45, 29 March 2024

Long term funding.

A covenant in a loan agreement which becomes effective on the occurrence of a certain event in the future. Used to enable loan agreements to have fewer and less onerous ('lite') covenants, typically to conform to other loans of the same borrower.

A common springing event is the level of utilisation of a loan facility at which time covenants such as ICR (interest cover ratio) and gearing come into effect.

Springing covenants are a form of contingent covenant.


See also