Finance Deals & Syndicated Lending · glossary
A promise the borrower keeps for the life of the loan. A maintenance covenant is a ratio tested on fixed dates, whatever the borrower does. An incurrence covenant is tested only when the borrower takes a step, such as borrowing more. Chapter 3 · Chapter 9
Explained in Chapter 3, Facilities and Their Flavours, of Finance Deals & Syndicated Lending.
The clearest difference is in the financial covenants. A maintenance covenant is a ratio the borrower must meet on every test date, whatever it does. Missing it is a Default. An incurrence covenant is tested only when the borrower takes a step, such as borrowing more or paying a dividend.Read Chapter 3, Facilities and Their Flavours →
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