Contingent covenant

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Revision as of 15:09, 1 August 2015 by imported>Doug Williamson (Align with qualifications material.)
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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 very significant 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