restrictive covenant

(redirected from Negative Covenants)
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Related to Negative Covenants: Affirmative Covenants

Restrictive Covenant

A bond covenant that forbids the issuer from taking certain actions. For example, a restrictive covenant may prevent an issuer from issuing more debt until the bond matures. More commonly, a restrictive covenant limits the dividends an issuer may pay to shareholders so as to reduce the risk to the bond. It contrasts with a positive covenant, which requires the issuer to take certain enumerated actions. It is also called a negative covenant.

restrictive covenant

See covenant.

restrictive covenant

A deed restriction. See covenant.
References in periodicals archive ?
These mechanisms include control, staged financing, information sharing, the duty to cooperate, negative covenants, and operational efficiencies.
Southern Water's financing structure benefits from structural enhancements, including trigger mechanisms (such as dividend lock-up provisions tied to financial, positive and negative covenants) and debt service reserve liquidity.
In addition, the negative covenants of the term loan were amended to substantially mirror the covenants contained in the company's 5 3/8% senior notes due 2022.
Also, the secured nature of the group's financing structure benefits from structural enhancements, including trigger mechanisms (such as dividend lock-up provisions tied to financial, positive and negative covenants) and debt service reserve liquidity.
EarthLink expects this new facility to contain customary affirmative and negative covenants with which EarthLink would be required to comply.
Failure to maintain a rating of Aa3 by Moody's or AA- by S&P invokes several negative covenants requiring the bank's permission to incur additional debt, guarantees, liens, release property, or reorganize.
The new facility has a stated interest rate of LIBOR plus a margin of 1.40%, needs an annual facility fee payment that is currently equal to 0.30% of the total loan commitments, provides for up or down interest rate margin and facility fee adjustments within stated ranges as per changes in the credit ratings of CRLP's senior unsecured debt, and contains customary representations, financial and other affirmative and negative covenants, events of defaults and remedies.
This new five-year amended revolving credit facility extends the maturity date from 25 June 2013 through to 4 January 2017, reduces the borrowing rate and commitment fees and amends certain affirmative and negative covenants.