Sound Global

[CityFarmer]

Eh, actually its quite common for bonds to have covenants based on interest coverage [Fixed Charge coverage ratios] or leverage ratios (might be over asset). There is also a difference between maintenance covenants (test once a year) and incurrence covenants (and test when adding new debt). Typically high yield bonds use incurrence covenants to allow the company some flexibility.

I had gone thru few bond issues, due to my holdings. None of them are base on interest coverage etc.

Interest ratio, leverage ratio are important in rating of the bond issue, and will affect the yield, but i do not see them as obligations in bond issued

Im just curious is there long-term bank debt that is callable on demand (except when a bank covenant is breached).
If there is such a case, based on accounting rules, it would be classified as short-term debt. All bank debt/bonds that have broken their covenants (which results in them being callable on demand) are classified as short-term debt based on accounting rules.

Let bring back the discussion to our context. I had highlight call on demand for bank debt (at the first sign of trouble), rather than at bank free will. So we are aligned.