Contingent covenant: Difference between revisions
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imported>Doug Williamson (Create the page. Sources: Pingyang Gao, University of Chicago, August 2011 http://faculty.chicagobooth.edu/workshops/accounting/past/pdf/GaoConservatismV3.pdf; Klaus M Schmidt, University of Munich 2008: http://www.et.econ.uni-muenchen.de/personen/pr) |
imported>Doug Williamson (Add links.) |
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''Loan documentation.'' | ''Loan documentation.'' | ||
A covenant which | A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure. | ||
A common example is a contingent covenant linked with the borrower's credit rating. | |||
The existence of such covenants is a very significant source of risk for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating. | |||
== See also == | == See also == | ||
* [[Contingency]] | |||
* [[Contingent]] | |||
* [[Covenant]] | * [[Covenant]] | ||
* [[Credit rating]] | |||
* [[Maintenance covenant]] | * [[Maintenance covenant]] | ||
* [[Ratings trigger]] | |||
* [[Springing covenant]] | * [[Springing covenant]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:The_business_context]] | |||
Latest revision as of 20:40, 10 September 2022
Loan documentation.
A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure.
A common example is a contingent covenant linked with the borrower's credit rating.
The existence of such covenants is a very significant source of risk for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating.
