medium · Debt Capital Markets credit-ratings-risk
In the context of the Restricted Payments covenant, what is a 'Permitted Investment'?
- An investment of the company's own dedicated employee pension assets into a single speculative, high-risk hedge fund vehicle.
- An outflow of cash to a subsidiary or joint venture that is specifically allowed and does not count against the builder basket.
- A strict contractual requirement that the company invest all of its surplus operating cash exclusively in U.S. Treasury bonds.
- Any acquisition of a direct industry competitor that is funded entirely with fresh sponsor equity rather than the firm's existing cash.
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