Financial covenant: Difference between revisions
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imported>Doug Williamson (Add link to Contract page.) |
imported>Doug Williamson (Link with Frozen GAAP page.) |
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* [[Covenant]] | * [[Covenant]] | ||
* [[Event of default]] | * [[Event of default]] | ||
* [[Frozen GAAP]] | |||
* [[Headroom]] | * [[Headroom]] | ||
* [[Loan agreement]] | * [[Loan agreement]] | ||
Revision as of 15:34, 17 January 2016
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.
