Contingent covenant: Difference between revisions
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== See also == | == See also == | ||
* [[Contingency]] | |||
* [[Contingent]] | |||
* [[Covenant]] | * [[Covenant]] | ||
* [[Credit rating]] | * [[Credit rating]] | ||
Latest revision as of 20:40, 10 September 2022
Loan documentation.
A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure.
A common example is a contingent covenant linked with the borrower's credit rating.
The existence of such covenants is a very significant source of risk for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating.
