Project Completion Restriction

Project Completion Restriction

A clause in a bond agreement requiring the issuer to issue more debt securities if necessary to finance the completion of whatever project that bond was intended to finance. That is, if the bond's financing is insufficient for the project for any reason, a project completion restriction requires the issuer to finish financing the project even if it requires acquiring more debt. Without the project completion restriction, the issuer may cancel the project if it becomes apparent that the bond's level of financing will not cover its costs. This clause exists to protect bondholders from the risk that the project will be abandoned, and, therefore, that the issuer will not secure the revenue from the project to cover the original bond issue. The project completion restriction is most common in municipal bonds.