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What is a covenant-lite loan?

A covenant-lite (cov-lite) loan has no financial maintenance covenants — the borrower is not tested each quarter against leverage or coverage ratios — leaving only incurrence covenants that apply when it takes a specific action such as adding debt or paying a dividend. Cov-lite terms are common in large syndicated loans; most middle-market private credit loans still carry at least one maintenance covenant. Agentas does not tag covenant terms per fund.

Figures from the researched book · updated Oct 12, 2026

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