Financial covenant

From ACT Wiki
Revision as of 15:41, 18 March 2017 by imported>Doug Williamson (Link with Translation risk page.)
Jump to navigationJump to search

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.


See also