Equity Cure
An equity cure permits new equity contributions, subject to documentation limits, to remedy a financial covenant breach or improve the relevant covenant calculation.
An equity cure permits new equity contributions, subject to documentation limits, to remedy a financial covenant breach or improve the relevant covenant calculation.
How Equity Cure works
Credit analysis asks whether an issuer can meet its obligations through the cycle and how much protection exists if conditions deteriorate. It combines cash-flow capacity, leverage, liquidity, business risk and access to financing rather than relying on a single ratio. Equity Cure is evaluated alongside leverage, cash generation, liquidity, refinancing needs and business risk. No single credit metric captures an issuer's ability to service debt through a full cycle.
Why it matters to credit investors
Equity Cure matters because credit markets price both the probability of stress and the expected loss if stress occurs. It helps separate operating performance from capital-structure, liquidity and market-technical effects.
What to look at
Assess cash generation, leverage, coverage, liquidity, refinancing needs, business cyclicality and access to capital together rather than in isolation.
Documentation and context
The meaning and enforceability of Equity Cure can vary by instrument, jurisdiction and documentation. BondStats uses the term as an educational market reference; the governing agreement and applicable law remain authoritative.
BondStats educational reference. This page is not legal, investment or restructuring advice.