Incurrence Covenants (Banking & Finance Glossary)

Summary

Covenants that must be met only at the time of incurrence as opposed to a maintenance covenant that requires ongoing compliance. For example, the Borrower may be restricted from incurring additional debt that would cause it to exceed a certain leverage ratio, rather than having to maintain a leverage ratio below a certain level on an ongoing basis. Incurrence Covenants are most commonly used in indentures.