Some debt covenants preserve repayment capacity by preventing mergers and acquisitions unless the debt is first repaid.

Debt Covenants

Specific agreements entered into by a borrower and lender, included in the terms of a loan or bond issuance, which place restrictions on the borrower to protect the lender.

Repayment Capacity

An assessment of a borrower's ability to repay a loan based on their financial situation.

Mergers and Acquisitions

Business activities where companies purchase or combine with other companies to expand their operations or enter new markets.