Loan structure with incurrence-only covenants (tested only on a specified borrower action) and no maintenance financial tests. The covenant package is a one-way ratchet: as long as the borrower takes no specified action, no test is ever run — which means a cov-lite loan provides the lender with NO early warning of deterioration. By Black-Cox the covenant-lite spread should exceed the covenanted spread by sim 80–120 bps; in BSL practice this differential is often absent, making cov-lite the structurally worse trade at parity pricing.