Glossary · Debt metrics
Covenant
A contractual condition in a loan — e.g. LTV ceiling, DSCR floor — that keeps a borrower in compliance.
Why it matters
Covenants quietly govern almost every important sponsor decision.
Related
- Cash sweep
A mechanism that diverts surplus cash to debt repayment when a covenant is breached.
- DSCR (Debt Service Coverage Ratio)
Net Operating Income divided by annual debt service. Can the asset pay its loan from its own cash flow? Lenders typically want 1.25–1.40x or higher.
- LTV (Loan-to-Value)
Loan amount divided by asset value. The headline leverage measure for stabilised debt.
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