Maintenance Covenants

Financial covenants that are commonly (but not necessarily always) applied in standard bank loan agreements, which are automatically tested on pre-determined dates and require the borrower to maintain an agreed level of financial health from period to period. The most common form of maintenance covenants are debt ratio covenants that mandate specific senior debt multiples and total debt multiples to be achieved at specific pre-determined dates. These effectively dictate the manner in which the borrowing company operates its business giving lenders greater control and protection to minimise repayment risk over the term of the loan.

Capital at risk. No FSCS cover. See Risk Statement.