Protective covenant
A part of the indenture or loan agreement that limits certain actions a company takes during the term of the loan to protect the lender's interests. |
Similar financial terms
Protective put buying strategyA strategy that involves buying a put option on the underlying security that is held in a portfolio.
Affirmative covenant
A bond covenant that specifies certain actions the firm must take.
Restrictive covenants
Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividend.
Positive covenant (of a bond)
A bond covenant that specifies certain actions the firm must take. Also called an affirmative covenant.
Negative covenant
A bond covenant that limits or prohibits altogether certain actions unless the bondholders agree.
Bond covenant
A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions.
Covenants
Provisions in a bond indenture or preferred stock agreement that require the bond or preferred stock issuer to take certain specified actions (affirmative covenants) or to refrain from taking certain specified actions (negative covenants).
