Security & Collateral · glossary
Tests of the borrower's figures in the Facility Agreement, checked every quarter over the twelve months just ended. Here there are two: interest cover of at least four times, and leverage. Failing one is an Event of Default, even when every payment is on time. Chapter 8 · see Interest cover, EBITDA
Explained in Chapter 8, The Breach, the Waiver and the Blocked Account, of Security & Collateral.
The main page for this term is Financial covenants, in Finance Deals & Syndicated Lending.
Loan agreements set financial covenants: tests of the borrower's figures, made every quarter. A borrower that fails one commits an Event of Default. The lender may then cancel the loan and demand all of it back at once, which is called acceleration.Read Chapter 8, The Breach, the Waiver and the Blocked Account →
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