Default

Definition:

In the context of a Credit Agreement or Indenture, a borrower’s or issuer’s failure to meet its legal obligations under the agreement, for example, and most commonly, the repayment of principal and interest when those amounts are due. Other defaults include breach of the Financial Covenant for Company MAC. A Default matures into an Event of Default when a specified grace period (typically except for principal payments) passes or the borrower/issuer gives notice that they are unable to meet their contractual obligations.

See also Event of Default.

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