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Interest Coverage Test

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Interest coverage test
A debt limitation that prohibits the issuance of additional long-term debt if the issuer's interest coverage would, as a result of the issue, fall below some specified minimum.

Interest Coverage Test
A rule that some companies have forbidding them from issuing more long-term debt securities if doing so would drive their interest coverage ratio below some, defined ratio. See also: Debt limitation.


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The entity fails a debt-equity or interest coverage test.
27, 2006 payment date, failing senior interest coverage tests have diverted principal proceeds to pay the senior secured note principal, but once these tests were cured, principal cashflows have been used to pay interest on the second priority senior notes.
The structure also includes more traditional class A and B OC tests as well as an interest coverage test.
 
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