Which of the following is an incurrence covenant?

An incurrence covenant is a type of restriction in a loan agreement that specifies certain conditions that must be met before the borrower can take specific actions, often related to taking on more debt or incurring liabilities. The correct answer indicates a specific threshold regarding the total amount of debt a company can take on, which is characteristic of incurrence covenants. By stating that the company cannot take on more than $2 billion of total debt, this condition is activated during periods when the company considers incurring new debt, thus ensuring the lender's risk remains manageable.

In contrast, options focusing on leverage ratios and interest coverage are typically classified as maintenance covenants. These require the borrower to continuously meet certain ratios throughout the life of the loan rather than only when they are considering new debt. The option regarding liquidating assets is not specifically related to thresholds or conditions tied to incurring new debt, making it less relevant in the context of an incurrence covenant. Overall, the specification of a cap on total debt is a defining characteristic of incurrence covenants, which makes this option the correct choice.