Financial Covenants Clauses
(Credit Agreement)


Summary

These clauses are the standard Financial Covenant clauses for a credit agreement used in syndicated loan transactions to require the borrower to comply with negotiated financial performance standards. These clauses assure lenders that the borrower will be able to repay its loans as planned. These clauses include practical guidance, drafting notes, and optional clauses. In strong markets, lenders are often willing to make loans to borrowers pursuant to covenant-lite financings, which either do not include financial covenants or only include financial covenants that spring into effect if a certain minimum portion of the revolving facility is drawn and outstanding. See Affirmative, Negative, and Financial Covenants. This form includes a number of common financial covenants, but note that there is no one-size-fits-all suite of financial covenants for any borrower. The specific financial covenants included in a credit agreement should be selected and negotiated only after initial agreement ...