Covenant-Lite Loan

Covenant-lite loan is a loan with fewer or less restrictive maintenance covenants than traditional leveraged loans.

Why this matters to income investors

Fewer ongoing tests may delay a lender’s response to credit deterioration.

How to use covenant-lite loan in your research

Read the borrower or issuer disclosures for collateral, payment priority, covenant terms, and missed payments. Then check how a deterioration could reduce interest income or the value available to support future dividends.

This material is general education and information, not individualized investment, tax, or legal advice.