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Rate Covenant

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Rate covenant
A provision governing a municipal revenue project financed by a revenue bond issue, which establishes the rates to be charged users of the new facility.
Rate Covenant
A provision in an indenture for a revenue bond stating guidelines for the prices that the facility the bond intends to finance is allowed to charge its customers. For example, if a revenue bond finances an electric facility, a rate covenant may state that the electric company must charge enough to cover its ongoing expenses, but not so much that it is unfair to consumers.
rate covenant
A provision for a municipal revenue bond issue that sets requirements for charging revenue on the facility that is being financed by the bond issue. For example, a rate covenant might require that the rates from customers of a city sewage plant be sufficient to ensure adequate maintenance and repair for the facility. A rate covenant is included in a bond agreement to protect the bondholders' interests.
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Failure by the city to boost net revenues to levels comfortably above the system's rate covenant in the upcoming fiscal year likely would lead to negative rating action.
Fitch Affirms Cedar Hills, Utah's Utility Revs at 'A'; Outlook to ... by Business Wire
The downgrade reflects Fitch's concerns about management's consistent lack of compliance with the rate covenant required by the bond indenture, and the expectation that debt service coverage will continue to remain below the rate covenant level in spite of the recent adoption of rate increases.
Fitch Downgrades Cocoa Beach, Florida's Utility System Bonds to ... by Business Wire
Credit concerns include the sum sufficient rate covenant which is offset by actual debt service coverage levels well in excess of the covenant.
Fitch Upgrades Oneida-Herkimer Solid Waste Management Auth (New York) ... by Business Wire
 
 
 
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