Covenant: Difference between revisions
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A formal legal agreement to take, or not to take, certain actions. | |||
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In loan documentation, a promise given by the borrower to take, or not to take, specified actions relevant to the borrower's creditworthiness.<ref>http://www.treasurers.org/node/8842</ref> For example, a ''financial covenant'' to maintain a minimum ratio of net worth to debt. | |||
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In relation to pension funds, the credit strength of the sponsoring employer and its commitment to the pension fund. | |||
Revision as of 15:15, 18 May 2016
1.
A formal legal agreement to take, or not to take, certain actions.
2.
In loan documentation, a promise given by the borrower to take, or not to take, specified actions relevant to the borrower's creditworthiness.[1] For example, a financial covenant to maintain a minimum ratio of net worth to debt.
3.
In relation to pension funds, the credit strength of the sponsoring employer and its commitment to the pension fund.
See also
- Accounting exposure
- Asset cover
- Breach of covenant
- Compliance
- Contingent covenant
- Credit risk
- Event of default
- Financial covenant
- Generally accepted accounting principles
- Incurrence covenant
- Interest cover
- Loan agreement
- Maintenance covenant
- MCT
- Net worth
- Non-financial covenant
- Restrictive covenant
- Waiver
References
Treasury Essentials: Covenants, The Treasurer, March 2013
