PE Associate Questions Recieved - On-cycle 2022
Want to open the floodquestions to help all parties involved going through 2022 on-cycle.
Size - LMM/MM/UMM/MF
Round - Initial/Final
"Q" - "Question"
PA - "Proposed Answer"
I'll go first...
Round - Inital
Q: What are the different types of debt covenants? Use cases for these covenants?
PA: Maintenance covenants require the borrower to maintain a certain equity cushion or debt coverage cushion to maintain their ability to repay its debt. Incurrence covenants prevent the borrower from taking certain actions which could be detrimental to existing lenders such as taking on more debt or paying out cash dividends to equity holders.