Springing covenant: Difference between revisions
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*[[Incurrence covenant]] | *[[Incurrence covenant]] | ||
*[[Maintenance 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.
