Covenant

aaash.ag
Posts: 7
Joined: Thu Oct 31, 2013 9:58 am

Covenant

Postby aaash.ag » Mon Dec 23, 2013 3:52 am

Need to know in detail about Covenant.What is Covenant and its significance?Also would like to know about two vital ratios -1.Debt Service Coverage and 2.Fixed Charge Coverage with formula and examples.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Covenant

Postby pradeeppdy » Thu Dec 26, 2013 10:56 am

Covenants is a kind of provision to a contract between issuer and buyer and it contains both Affirmative and negative. For example Affirmative covenants are:- 1) Maintain liquidity ratio at some specified level, 2) Timely payment of interest and principal.
Negative covenants:- It include restrictions on issuer's. for example - 1) Do not take additional borrowings on the pledged assets.

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Covenant

Postby pradeeppdy » Fri Apr 04, 2014 4:54 am

A Covenant is the condition in the bond indenture or agreement what suould be done by bondholder. The are two kind of covenent : Afirmative and Negetive. Affirmative covenant are those conditions which the bondholder should follow . Negetive covenant are those conditions which he should not do or is restricted to do.


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