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 legal contexts, 'debt-covenant-negotiation' refers to the legal negotiation of terms within a debt agreement. A lawyer might advise, 'It's crucial to carefully negotiate debt covenants to avoid restrictive terms that could hamper your company's operations.'

Practice Scenarios

Business

Scenario:

With our upcoming bond issuance, we should discuss our financial standing and potential areas for negotiation with lenders.

Response:

I agree. As part of debt covenant negotiations, let's also discuss improving our cash flow to exhibit creditworthiness to lenders.

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.