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Understanding financial covenants.(Selected Topic)
Borrowers sometimes fail to understand the use of financial covenants by banks, the ways in which the covenants are derived and applied, and the protections that covenants can provide the borrower as well as the bank.
What Are Financial Covenants?
There are any number of definitions for financial covenants. Here's one I like: "Financial covenants are standards for the financial strength and performance of the borrower that serve as protections for both the bank and the borrower." Sometimes, banks unilaterally establish the covenants or establish the covenants through negotiation and with the mutual concurrence of the bank and the borrower. I prefer the ...
- Coming to terms with financial covenants.(Evergreen: Covenants--2 of 4)
- Magazine article from: The RMA Journal Strischek, Dev June 1, 2007 700+ words
...dazzle our borrowers with dozens...necessary? Which financial covenants act as triggers...undermine the borrower's profitability...to select financial covenants that stabilize...how a few financial covenants can contain...unrestrained, a borrower might ...
- Tips for developing, setting, and monitoring financial covenants.
- Magazine article from: The RMA Journal Hamm, Richard May 1, 2008 700+ words
...agreements, financial covenants are split between...the road." Financial covenants include outright...Objectives of Financial Covenants? RMA's course...points in a borrower's operating...many of our borrowers don't like...
- Receding Financial Covenants Threaten Robust Loan Market.
- Newspaper article from: Bank Loan Report Stein, Gabrielle August 21, 2006 700+ words
...robust credit environment, weakening financial covenants may pose an ominous threat to the continued...beat' - monitoring the activity of the borrower and alerting lenders if something is...mean that there are less controls over borrower behavior, making a problem more likely...
- ContiFinancial Announces Substantial Loss in Fourth Quarter Fiscal 1999; Banks...
- Press release article from: Business Wire June 4, 1999 700+ words
...paper program have amended those facilities to eliminate all financial covenants until the August 20 maturity date of these facilities...securitizer, servicer and seller of home equity loans made to borrowers whose needs may not be met by traditional financial institutions...
- Fitch Opines on Financial Covenants in U.S. REIT Bond Indentures.
- Press release article from: Business Wire May 16, 2007 700+ words
...governed by indentures that lack financial covenants raises the possibility of further...widespread omission or elimination of financial covenants in REIT bond indentures going forward...for outstanding bonds guarded by financial covenants. If issuers receive the requisite...
- Oil Refineries 50%-Held Carmel Olefins Publishes Update on Financial Covenants.
- Press release article from: PR Newswire October 5, 2009 700+ words
...Banks on the Subject of More Lenient Financial Covenants 1. Consequent to what is stated...Company's non-compliance with the financial covenants that had been set with banks, the...Banks have agreed to change the financial covenants that were in force immediately prior...
- Kansas City Southern Receives Financial Covenants Waiver.
- Press release article from: Business Wire April 4, 2003 700+ words
...Company's request for waiver of the financial covenants under the agreement. As disclosed...requested a waiver from existing financial covenants in its Amended and Restated Credit...would have allowed it to meet its financial covenants as of March 31, 2003, the Company...
- Masonite International Inc. Indicates Likely Non-Compliance with Financial...
- Press release article from: Business Wire July 9, 2008 700+ words
...compliance as of such date with the financial covenants contained in the Company's credit...under the credit facility. Both financial covenants relate to EBITDA metrics and reflect...to maintain compliance with our financial covenants," said Fred Lynch, President...
Source: HighBeam Research, Understanding financial covenants.(Selected Topic)