Bond covenant

(redirected from Debt Covenants)

Bond covenant

A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions.

Bond Covenant

An agreement between the issuer and holder of a bond, requiring or forbidding certain actions of the issuer. Positive covenants require actions while negative covenants forbid them. The exact terms of a bond covenant must be written in the bond indenture.
References in periodicals archive ?
The purpose of this paper is to investigate whether an association exists among monitoring, debt covenants, and the cost of debt and whether it has been affected by certain provisions of the Sarbanes-Oxley Act of 2002 (hereafter SOX).
Moody's Investors Service explains in a new Special Comment that the financial crisis and the resulting macroeconomic shock have exerted pressure on the compliance of banks with debt covenants.
VIOLATING DEBT COVENANTS an tarnish a company s credibility n the business community with lightning speed.
We started with a clean slate, and I was able to help negotiate the loan agreement; create a comprehensive financial package for board meetings; design financial models that generated, tracked and projected the company's financial statements, debt covenants and liquidity; and design discounted cash flow models used for lease vs.
While AOL Time Warner executives have said debt covenants would not be affected by the none-cash charge, accounting experts say such charges can hurta company's debt rating as well as its ability to borrow.
They also bore fraud in mind when debt covenants were restrictive in a situation where income was better than expected.
The debt covenants restricted the amount of debt (other than certain short-term debt) that the parent and subsidiary could incur to a certain percentage of the parent's net tangible assets.
Companies must disclose violations of debt covenants and the negotiated outcomes with lenders to the Securities and Exchange Commission.
In an effort to reduce contracting costs, thus producing a net increase in the value of the firm through the use of covenants, Smith and Warner suggested that systematic patterns of debt covenants would exist across debt covenants.
Hollywood's decision to pursue equity financing is the result of both the general health of equity markets and its desire to avoid debt covenants that might place constraints on future operations.
The actual declaration and payment of future dividends and the establishment of record and payment dates, if any, are subject to the determination by the Company's Board of Directors each quarter after its review of the Company's then-current strategy, applicable debt covenants and financial performance and position, among other things.