Abstract: Covenants are traditionally viewed as contractual devices used by banks to monitor borrowers. We examine whether covenants can also be used by equity investors outside of loan contracts to help forecast future borrower performance. Using analysts to proxy for investors’ behavior, we find that analysts use the covenant thresholds set on borrower EBITDA to revise their expectations. Specifically, analysts revise their outstanding forecasts upward when the forecasts fall below the threshold and downward when they are well above it. We also find that EBITDA covenants contain incremental information useful for predicting future borrower performance and the revisions triggered by these covenants result in more accurate forecasts. Beyond analyst forecasts, we also find a reduction in information asymmetry around loans with EBITDA covenants, consistent with the idea that investors can use EBITDA covenants to help predict borrower performance. Overall, we highlight a new and perhaps unintended use of EBITDA covenants by equity investors.