Financial covenants — principles

Financial covenants are a specific type of undertaking. They are promises to meet or comply with certain financial thresholds.

This guidance note examines:

• • why financial covenants are used in finance transactions;
• • how financial covenants are selected for a particular transaction;
• • key issues which arise in the context of all financial covenants; and
• • what testing periods and compliance certificates are.

See Financial covenants — principles.