both the World Bank and the EBRD have recently adopted new policies with respect to the circumstances under which they are prepared to waive their rights obtained under their negative pledge clauses in order to encourage project financing from private sources and external credit agencies in eligible countries".
New Approaches to Economic Development: The World Bank, the EBRD, and the negative pledge Clause.
The negative pledge clause and the classification of financing devices: A question of perspective.
The notes are subject to standard change of control, cross-default and
negative pledge clauses.
The use of exit consents worked well in Ecuador in 2000, where exiting bondholders agreed to remove cross-default and
negative pledge clauses.
It is difficult to generalize about such so-called
negative pledge clauses because they are heavily negotiated and customized to the needs of the parties.
However, a loan with an assignment of export proceeds could have achieved the same purpose and, in the case of the UBS/BPOI facility, the main reason for electing the pre-payment structure was actually to circumvent
negative pledge clauses present in other Angolan transactions which prevented Sonangol from assigning its right to receivables from oil contracts.
Buyers look to those issuers that have limitations on debt incurrence or restricted payments, tests, and strong
negative pledge clauses not typically found in investment grade deals.
