Jurisdiction(s):
United Kingdom

Key definition

Interest cover definition

What does Interest cover mean? interest cover (interest coverage ratio) describes how comfortably a company can meet interest on its debt from trading profits for the same period. It is not defined by legislation or case law; it is a widely used financial metric and a common financial covenant in UK and Irish loan agreements and bond documents. Definitions are set by contract or by reference to the accounts and typically use operating profit or EBIT (sometimes EBITDA) divided by net interest payable (finance costs), with specific inclusions/exclusions (for example, exceptional items, capitalised interest, intra‑group interest). The ratio shows the impact of gearing/leverage...

England social housing finance for Registered Providers: financial covenants, security valuation (EUV-SH/MV-T), sector-specific terms, interest rate options and Spens break costs

Published by a LexisNexis Banking & Finance expert

Practice notes

This Practice Note explores the principal legal terms typical of social housing finance and what distinguishes them from financing in other sectors. It focuses on standard financial covenants and other sector‑specific provisions, including events of default, together with terms linked to the availability of long‑term fixed rate interest options. For more on social housing finance transactions, see Practice Notes:

Social housing entities entering into finance transactions
Key deal structures in social housing finance
Taking and enforcing security from social housing entities

This Practice Note concentrates solely on private not‑for‑profit providers of social housing registered in England (referred to as ‘RPs’), as they comprise the vast majority of private debt finance raised by housing associations to date. It does not cover providers registered in Wales.

Financial covenants—introduction

The principal financial covenants in social housing finance are:

loan to value
Gearing
Interest cover
(less commonly) net rental income cover from charged properties

Loan to value covenant

This covenant typically appears in all social housing finance transactions. Nearly all social housing financing is...

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Web page updated on 21/05/2026

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