covenant


Also found in: Dictionary, Thesaurus, Medical, Legal, Idioms, Encyclopedia, Wikipedia.
Related to covenant: Covenant marriage

Covenant

An agreed action to be undertaken (Positive) or not done (Negative). A breach of a covenant is a default.

Covenant

A provision in an indenture. An indenture sets the terms of a bond; its terms include the coupon rate, the period until maturity, and whether the bond comes with any special features like convertibility or whether it is callable. A covenant within an indenture states what actions the issuer and the bondholder may or may not take in certain situations. Covenants (and indentures generally) exist to reduce the risk to all parties to a bond.

covenant

A clause in a loan agreement written to protect the lender's claim by keeping the borrower's financial position approximately the same as it was at the time the loan agreement was made. Essentially, covenants spell out what the borrower may do and must do in order to satisfy the terms of the loan. For example, the borrower may be prohibited from issuing more debt by using certain assets as collateral. Likewise, the borrower may be required to issue reports to bondholders on certain dates. Also called protective covenant, restrictive covenant. See also negative covenant, positive covenant.
Case Study In February 2002 Qwest Communications issued a warning that the company was in danger of violating a bank loan covenant by the end of June. A major slump in the telecom business combined with heavy indebtedness caused concern that the firm's debt would exceed the specified maximum of 3.75 earnings before interest, taxes, depreciation, and amortization. A month later the company announced that in return for agreeing to use $608 million from a $1.5 billion bond issue to reduce bank debt, the bankers agreed to a concession that raised the covenant maximum to 4.25 until the end of September, and 4.00 during the following six months. The covenant had been included as part of the original bank loan agreement in order to help insure that Qwest could continue to meet its existing obligations before taking on additional debt.

covenant

a written agreement by a person to pay a given sum of money to some other person or organization for a specified period of time. Where a covenant arrangement allows a donor relief from income tax on any sums paid over, the covenant provides a tax-efficient means of making financial provision for a relative or charity.

covenant

a specific condition in a legal agreement or CONTRACT. For instance, a formal agreement between a COMMERCIAL BANK and a JOINT-STOCK COMPANY to which it is loaning money might contain a covenant stipulating a limit on dividend distributions from profits.

covenant

An agreement. For example,one can make a “covenant not to compete”a provision of a business sale,or one can write a restrictive covenant regarding the use of real property into the real estate records,which binds all owners whether it is contained in their specific deed or not.

References in periodicals archive ?
For more information about Covenant Care, visit www.
VanDrunen appropriately begins with the covenant of creation, which is a natural relationship that God instituted by creating human beings in his own image.
All 22 local authorities in Wales have signed the Community Covenant which is a voluntary statement of mutual support between armed forces and civilian communities - with Blaenau Gwent council being the latest authority to sign up.
Washington--On August 12, a document entitled "Reflections on Covenant and Mission" was issued by the American Bishops Committee for Ecumenical and Interreligious Affairs.
If the Eucharist is the renewal of our covenant relationship, it is the cup that explicitly conveys this.
The value of the property is assessed by a professional appraiser before and after the covenant is placed on the title.
The Covenant Players regard themselves as missionaries and each of the four vingettes had a message of friendship, getting along or helping one another.
The major obstacle to a Christian recognition of the reality of Judaism is the centuries-old theological attitude according to which the "old" Jewish order or covenant has given way to a "new" Christian one.
This means that the covenant continues to be enforceable even when the buyer sells the land on to another person.
She also served as a member of the Church of England's General Synod at the time the covenant was being developed and was known for correcting misinformation among Britons about the Episcopal church.
However, FAS 141R appraisals do not determine whether the intent of a noncompete covenant was compensatory or to protect the value of the acquired business goodwill.
By comparing the covenants with ancient (Hittite) treaties, George Mendenhall enhanced knowledge of the historical and structural elements of the covenant (Law and Covenant in Israel and the Ancient Near East, 1955), and Johannes Pedersen explored the anthropological dimension of covenant making (Israel: Its Life and Culture, in various editions).