It stands for event risk covenant; a bond provision that requires that the bond is turned in, or redeemed, at par or at a premium in the event of a “designated event” (triggering event) such as a corporate takeover, merger, or anti-takeover restructuring that would dematerialize significant corporate assets. If a triggering event occurs, the event risk covenant allows bondholders to sell back their holdings to the issuer at par value or at a premium. This type of event risk convents is referred to as a poison put.

Another type of event risk covenants is the reset which permits bondholders to renegotiate the interest rate (coupon rate) taking into account the potential impact of the triggering event (i.e., the proportions of the event risk).