Limitation on liens

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Limitation on liens

A bond covenant that restricts in some way a firm's ability to grant liens on its assets.

Limitation on Liens

An aspect of some bonds in which the issuer is only allowed to grant liens on its assets in certain circumstances. A bond with a limitation on liens generally carries lower risk because, in the event of default, the issuer's assets have fewer liens from secured creditors. This means that the bondholders have a higher priority on the proceeds of liquidation.
References in periodicals archive ?
All of Motorola's indentures include limitations on liens covenants.
The Subordinate Credit Agreement includes usual and customary affirmative covenants for credit facilities of this type and size, as well as customary negative covenants, including, among others, limitations on liens, hedging, mergers, asset sales or dispositions, payments of dividends, incurrence of additional indebtedness, etc.
Fitch's concerns include Dana's ability to obtain sufficient secured bank financing may be constrained by unsecured bond indentures' limitations on liens covenant; a higher risk that liquidity needs could increase if suppliers were to begin to insist on cash terms; the potential for more aggressive restructuring actions, which could increase demands on cash; Dana's reliance on the declining sport utility vehicle (SUV) market; and the company's financial condition heading into a potential commercial vehicle downturn in 2007.
In this context, other important covenants include limitations on liens and limitations on asset sales.
The Amendments include amendments to the covenants in each Indenture regarding financial reporting, limitations on restricted payments, merger and consolidation and sale of substantially all assets, dividends and payment restrictions, incurrence of indebtedness, limitations on liens, investments in certain subsidiaries, transactions with affiliates and limitations on other subordinated indebtedness.
Based on the Company's receipt of valid and irrevocable consents from holders of at least a majority in aggregate principal amount of each series of Notes, the Amendments to be adopted include (i) amendments to the restrictive covenants in each Indenture regarding financial reporting, limitations on restricted payments, merger and consolidation and sale of substantially all assets, dividends and payment restrictions, incurrence of indebtedness, limitations on liens, investments in certain subsidiaries, transactions with affiliates and limitations on other subordinated indebtedness, for the purpose of conforming such restrictive covenants substantially to analogous, but less restrictive, covenants in the indentures governing the U.
Based on the Company's receipt of consents from holders of at least a majority in principal amount of the each series of Notes, the Amendments to be adopted include (i) amendments to the restrictive covenants in each Indenture regarding financial reporting, limitations on restricted payments, merger and consolidation and sale of substantially all assets, dividends and payment restrictions, incurrence of indebtedness, limitations on liens, investments in certain subsidiaries, transactions with affiliates and limitations on other subordinated indebtedness, for the purpose of conforming such restrictive covenants substantially to analogous, but less restrictive, covenants in the indentures governing the U.