Debt covenants

Covenant design

A debt covenant is a provision in a debt contract which restricts the borrower from engaging in specified actions after the debt instrument has been sold to the lender.

Covenants are used to control the conflict between debtholder and shareholder. Covenants may restrict corporate production policy or investment policy, or they may involve restrictions on the payment of dividends or on corporate financing policy.

Danziger Capital Partners LLP advises United Kingdom companies on the design and negotiation of covenants in loan agreements.