Covenant

Categories: Regulations

Not to be confused with condos for nuns (yeah...you're thinking of a convent).

In finance, a covenant is just a promise—usually a security is backed by a series of covenants or guarantees from the issuer which outline the terms under which the lender will be paid back her interest and then principal on that original loan. Or, if it's an equity investment, then it outlines the ownership share or rights that the particular equity investor...owns.

And yeah, you don't want to get in the routine of breaking your financial promises. That's a bad, er...habit. #nunjoke

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