Financial covenant: Difference between revisions
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imported>Doug Williamson m (Added "See also" reference back to "Headroom".) |
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* [[Covenant]] | * [[Covenant]] | ||
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* [[Loan agreement]] | * [[Loan agreement]] | ||
Revision as of 14:03, 21 November 2012
Loan documentation. A clause in a loan agreement that commits the borrower to operate within predefined financial constraints.
For example, an interest cover covenant might state that interest cover will be no less than 3 times; the borrower promises that the ratio will always exceed the set figure.
Breach of a financial covenant would normally constitute an event of default.
