debt-covenant-negotiation

Vocabulary Word

Definition

'Debt covenant negotiation' refers to the process where parties involved in a loan discuss specific obligations and conditions that should be followed. Think of it like terms and conditions you agree to when signing up for a website or app, but for loans.

Examples in Different Contexts

In banking and lending, 'debt-covenant-negotiation' is critical for defining the obligations of the borrower. A loan officer might say, 'Our debt-covenant-negotiation ensures that borrowers maintain certain financial ratios, protecting both the lender and borrower's interests.'

Practice Scenarios

Banking

Scenario:

Loans come with risks; we need to put protective measures in place. The negotiations around loan covenants will be crucial.

Response:

Yes, we should consider using debt covenant negotiation to impose a lower debt-to-equity ratio.

Accounting

Scenario:

Our EBITDA calculation method seems to be a point of contention. We must address this in the upcoming negotiation session.

Response:

In the debt covenant negotiation, I propose we push for excluding non-cash expenditures from the EBITDA calculation.