This study investigates the impact of recurring nonrecurring items on lenders’ perception of borrowers’ risk by examining the relations between the recurrence of nonrecurring items and various loan features, including interest rate spread, loan maturity and size, and the tightness and number of income statement and balance sheet based covenants. Using U.S. private loan issues by publicly traded borrowers, we find that the recurrence of nonrecurring items is positively associated with interest rate spread and the tightness and number of income statement based covenants, and negatively associated with loan size and the number of balance sheet based covenants, showing that the recurrence of nonrecurring items is positively related to perceived borrowers’ risk. Our findings are robust to lender preferences, industry based financial shocks, and alternative measurement windows. The findings demonstrate the impact of recurring nonrecurring items on lenders’ perception of risk and emphasise the importance of further investigation into such items when pricing debt.