covenant

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Related to covenants: Restrictive covenants

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 ?
Covenants dictate how a property can and can not be used and are registered at the Land Registry.
Moody's explains that the most important debt covenants are capital adequacy ratio (CAR) covenants, which, on average, exist in 20% of banks' market funding and 12% of their total funding.
Debt covenants can be affirmative, negative or restrictive covenants.
On behalf of Tax Executives Institute (TEI), I am writing to express TEI's concerns about proposed amendments to the Income Tax Act (hereinafter "the ITA" or "the Act") to revise the tax treatment of restrictive covenants.
Through Christ's flesh, the covenant is written on our flesh.
Prior to the actual issuance of bonds, companies negotiate with the bond trustee specifically on which financial covenants are to be included in the debt contract.
God, working through the Logos and the Spirit, has established authentic covenants with "extra-biblical" peoples, such as Hindus and Buddhists: "They too are covenant peoples and deserve to be called 'peoples of God'" (226).
15) In her influential Faith and Fratricide, Rosemary Ruether also envisioned two covenants and likened Judaism and Christianity to two brothers.
Owner covenants and agrees with tenant that upon tenant paying the rent and additional rent and observing and performing all the terms, covenants and conditions, on tenant's part to be observed and performed, tenant may peaceably and quietly enjoy the premises hereby demised, subject, nevertheless, to the terms and conditions of this lease including, but not limited to, Article 31 hereof [i.