Interest Cover Ratio Default?

United Kingdom
06/06/2023
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Higher global interest rates are continuing to add pressure on borrowers’ ability to comply with interest cover financial covenants and service the interest on their outstanding debt.

In this finance briefing we consider the key initial steps and issues for lenders and borrowers facing a potential default of interest cover financial covenant in a real estate finance investment loan agreement.

We discuss the legal and practical considerations involved with calculating historic and projected interest cover ratios, possible cure rights and the initial options potentially available for lenders and borrowers.

For our discussion of the initial steps and issues for lenders and borrowers facing a potential default of loan to value financial covenant in an investment loan agreement, see loan-to-value-default (cms-lawnow.com). We will look at the next steps for lenders considering enforcement and restructuring options in separate briefings.

Click here to read the briefing.

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