Springing covenant: Difference between revisions
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''Long term funding''. | ''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 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. | 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.
