Finance Deals & Syndicated Lending · glossary

Cov-lite

A leveraged loan with no maintenance covenants, so no ratio is tested on fixed dates. It comes from lenders competing for large deals. Sunrise is not cov-lite: it keeps two maintenance tests. Chapter 3

Explained in Chapter 3, Facilities and Their Flavours, of Finance Deals & Syndicated Lending.

How it comes up, in Chapter 3
In large leveraged deals, competition among lenders has produced cov-lite loans, which have no maintenance covenants at all. So the riskiest borrowers often have the fewest early warnings. That reflects bargaining power, not prudence.
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Where this term lives

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