negative covenant


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Related to negative covenant: Negative pledge, Affirmative Covenants

Negative covenant

A bond covenant that limits or prohibits certain actions unless the bondholders agree.

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.

negative covenant

A clause in a loan agreement that prohibits the borrower from an activity. For example, a negative covenant may restrict the payment of dividends or the issuance of new debt. Compare positive covenant.
References in periodicals archive ?
These mechanisms include control, staged financing, information sharing, the duty to cooperate, negative covenants, and operational efficiencies.
The restricted payments baskets contained in the negative covenants target IP collateral in a similar fashion: one basket limits investments in restricted subsidiaries and joint ventures (JVs) that are not guarantors (i.e.
The facility includes its affirmative and negative covenants.
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.
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.
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.
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.