Cov-lite

‘Cov-lite’ is used to describe a loan where the lender, typically a bank, does not impose standard performance conditions on a borrower. The loan documentation is therefore literally ‘covenant light’. The standard covenants, or clauses, typically waived would normally set operating targets to ensure that the borrower, often a private equity firm, generates sufficient cash flow to meet interest and capital repayments. A breach would give the bank the right to demand repayment or take control of the company.

MoneyWeek magazine

Latest issue:

Magazine cover
Hard cash

What's next for gold and silver?

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues
Shale gas 'fracking' promises to transform Britain's energy market. Find out what it is, what it means, and how to invest.

More from MoneyWeek

FREE REPORT:
What you should really do with your money (2014 Edition)


How to buy and sell penny shares

A beginner's guide to investing in gold

How to invest in British fracking