maintenance covenant
C2CEFR level
85/100Rarity: very rare
TechnicalRegister
Law phrase
A financial covenant tested at fixed intervals regardless of any action by the borrower, requiring a ratio to be maintained on each test date.
The banks insisted on a quarterly maintenance covenant rather than an incurrence-based test.
Business noun
A loan condition requiring the borrower to satisfy specified financial ratios on a regular basis throughout the life of the debt.
The maintenance covenant tested net leverage each quarter, so a weak trading period risked a breach.
Rarity runs from 0 (a word everyone knows) to 100 (almost never seen outside specialist or literary writing). Level is the word's real difficulty on the CEFR scale, from A1 to C2.
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