Springing covenant: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Define 'lite' covenants.)
imported>Doug Williamson
(Add links.)
Line 10: Line 10:


== See also ==
== See also ==
*[[Covenant]]
*[[Covenant-lite]]
*[[Incurrence covenant]]
*[[Incurrence covenant]]
*[[Maintenance covenant]]
*[[Maintenance covenant]]


[[Category:Long_term_funding]]
[[Category:Long_term_funding]]

Revision as of 14:55, 19 July 2016

Long term funding.

A covenant in a loan agreement which becomes effective on the occurrence of a certain event in the future. Used to enable loan agreements to have fewer and less onerous ('lite') covenants, typically to conform to other loans of the same borrower.

A common springing event is the level of utilisation of a loan facility at which time covenants such as ICR (interest cover ratio) and gearing come into effect.

Springing covenants are a form of contingent covenant.


See also