Covenant

Covenant is a contractual promise or restriction in a loan, bond, or other financing agreement.

Why this matters to income investors

Contractual protections can give lenders information or remedies when credit quality weakens.

How to use covenant 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.