Provision of information

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A provision of information covenant requires the borrower to provide information to enable the lender to monitor the borrower’s credit risk.

Such information routinely includes copies of published financial information and circulars to shareholders.

It is unlikely that treasurers will see any problem with this.


Ideally from a corporate borrower's perspective, the borrower would only provide published information, but weaker credits are unlikely to be able to negotiate this.

Generally the level of information required increases as the credit quality of the borrower falls, and can include budgets, forecasts and management accounts.


Problems may arise when the borrower is a quoted company and the information sought is unpublished and therefore possibly price sensitive, especially if the lender is a universal bank conducting both lending and share dealing activities.

Even though most banks will have internal 'Chinese walls' (barriers designed to prevent transfer of confidential information between departments), treasurers may wish to obtain additional confidentiality undertakings bearing in mind regulatory requirements imposing a ‘continuing obligation’ of the avoidance of a false market.


Where non-bank lenders are involved in bank type lending arrangements, this issue of confidentiality becomes more extreme.

While banks have established procedures for keeping information separate from different areas, non-banks do not have this sophistication.

One solution is to restrict information to certain lenders to only published data and indeed some presentations are managed in two parts to deal with this.


See also