Cost of equity

An event of default is the event of breaching a loan agreement or other similar agreement

The occurrence of an event of default normally expressly permits the lender to accelerate repayment of the amount outstanding on the loan and to cancel any further lending. However, the lender is not obliged to and may choose not to accelerate repayment.

Each loan agreement will normally define exactly what constitutes an event of default of that agreement.

Events of default will generally include:

• any failure to pay interest or capital on a due date,
• any failure to comply with a covenant or breach other obligations under the agreement, and
• any inability to repeat a representation.

Cross defaults are defaults in one facility that constitutes a default in another.

See also

• Acceleration
• Breach of covenant
• Covenant
• Cross default
• Default
• Financial covenant
• Grace period
• Loan agreement
• Material adverse change
• Representations and warranties
• Waiver
• Putting a limit on losses