Interest cover and SLP: Difference between pages

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''Financial ratio analysis - long-term solvency ratios.''
''Sustainability - loan markets.''


'''1.'''
Abbreviation for the Social Loan Principles.


From a whole-firm perspective, interest cover is the ratio of Profit before interest and tax ÷ Interest payable.


The SLP are a voluntary framework for social loans, issued by the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications & Trading Association (LSTA).


Interest cover measures the safety or sustainability of the future debt servicing flows, from the perspective of the lenders. 


The greater the interest cover ratio, the greater the likelihood that the firm paying the debt interest (and other debt servicing costs) will continue to be able to service the debt in the future. 
== See also ==
 
* [[Asia Pacific Loan Market Association]]
So a higher cover ratio is associated with lower risk for the debt investors.
* [[ESG investment]]
 
* [[Green Bond Principles]]
 
* [[Loan Market Association]]
In the theoretical situation where the cover ratio fell below 1.0, the interest would be said to be ''uncovered'' and the debt would not be sustainable at its previous level unless there was a recovery in the firm's operating profitability.
* [[Loan Syndications & Trading Association]]
 
* [[Social Bond Principles]]
In practice lenders want much higher minimum interest cover ratios than 1.0, such higher minimum usually stipulated in the related loan documentation. 
* [[Social loan]]
 
* [[Social Loan Principles]]
So the borrower in this situation would be likely to be already in breach of a related borrowings covenant.
* [[Social project]]
 
* [[Sustainability]]
 
* [[Sustainability Bond Guidelines]]
Also known as the Interest cover ratio or TIE (times interest earned).
 
 
'''2.'''


An analogous measure, in relation to an individual tranche or class of debt (rather than to the whole firm).


===Other links===
[https://www.lma.eu.com/application/files/1816/1829/9975/Social_Loan_Principles.pdf Social Loan Principles - LMA, APLMA & LSTA]


== See also ==
* [[Cost of financial distress]]
* [[Covenant]]
* [[Cover ratio]]
* [[Gearing]]
* [[Interest rate risk]]
* [[Long-term solvency ratio]]
* [[Profit before interest and tax]]
* [[Uncovered]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Long_term_funding]]
[[Category:Treasury_operations_infrastructure]]
[[Category:Compliance_and_audit]]
[[Category:Ethics]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 11:55, 29 July 2021

Sustainability - loan markets.

Abbreviation for the Social Loan Principles.


The SLP are a voluntary framework for social loans, issued by the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications & Trading Association (LSTA).


See also


Other links

Social Loan Principles - LMA, APLMA & LSTA

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