Covenants

Legally binding stipulations or requirements that the borrower must meet to remain in good standing on a loan or bond. A covenant breach may put the borrower in default.

Maintenance (or affirmative) covenants are specific things the borrower must do (e.g., maintain a certain interest coverage ratio). Incurrence (or negative) covenants limit the borrower (e.g., the borrower may be prohibited from increasing dividends or exceeding certain debt ratios).