Limitation on asset dispositions

Limitation on asset dispositions

A bond covenant that restricts in some way a firm's ability to sell major assets.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Limitation on Asset Dispositions

A provision in some bond indentures limiting the issuer's ability to sell certain stated assets. A limitation on asset dispositions reduces the risk to bondholders that the issuer will sell its assets and then default on the bond, which would mean that the bondholders would be completely unable to recover their investments. See also: Secured bond.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved