medium · Private Credit loan-structures-instruments

Which of the following describes a 'Springing Covenant' in a credit agreement?

1. A covenant that automatically increases the interest rate if a scheduled payment is missed.
2. A covenant that forces the borrower to hedge all of its floating rate interest exposure at all times.
3. A covenant that only becomes active when a certain percentage of the Revolving Credit Facility is drawn.
4. A covenant allowing the GP to recall prior distributions made to LPs if the fund's hurdle rate is not met.

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