rate covenant

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.
References in periodicals archive ?
0 times (x) maximum annual debt service (MADS) rate covenant and historical additional bonds test, are also rating factors.
Additional TIFIA loan draws are allowed once the concession agreement with the participating rental car companies (PRCC) has been modified so that it conforms to the loan documents' rate covenant provisions.
There is no rate covenant while the general fund is pledged.
It is therefore Fitch's opinion that rate increases going forward, at a minimum, will likely be ordered as needed to meet the rate covenant.
41 times (x) of gross debt service, marking the second such year that net revenues were sufficient to make the rate covenant.
Legal provisions are strong; the rate covenant is 1.
25x rate covenant for net revenues excluding connection charges, part of the system's two-prong rate covenant test.
The residual nature of the airport's use and lease agreement historically provided debt service coverage well in excess of the rate covenant of 1.
Additional security for bond holders is provided by the city's rate covenant, which requires maintenance of rates, fees and other charges adequate to pay at least 100% of annual debt service on all outstanding senior lien bonds as well as any subordinated indebtedness, including the utility improvement assessment bonds (Southeast 1 Area), series 2006.
Investors may welcome the greater certainty of a collateral loss profile that a weighted average recovery rate covenant would provide, especially as many CLO issuers expand into second-lien and mezzanine loans that have much less certain recovery expectations," said Zaydman.
Fitch expects debt service coverage to remain at or above the authority's rate covenant given moderate traffic growth expectations generally in the mid to high single digits through the medium term, programmed toll increases within inflationary levels and continued careful expense management.
Base case forecasts project a rate covenant default in fiscal 2006 and the use of $1.