negative pledge clause

Negative pledge clause

A bond covenant that requires the borrower to grant lenders a lien equivalent to any liens that may be granted in the future to any other currently unsecured lenders.
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Negative Pledge

A negative covenant in a bond indenture in which the issuer agrees not to use any of its assets as security for another debt obligation or other liability if doing so would adversely impact the riskiness of the bond. This protects bondholders and also allows the issuer to pay a lower coupon rate.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

negative pledge clause

A restriction in a borrowing agreement that limits a borrower's ability to issue new debt having a priority claim on the firm's assets. A negative pledge clause, a part of some debenture agreements, protects the creditors against a dilution of security.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The debenture terms and conditions include a negative pledge clause. All of NNEG's debt will be senior unsecured after the debenture issuance.
of covenants, including a negative pledge clause, limits on mergers,
For example, they would restrict the enforceability of covenants, such as a negative pledge clause, to relatively sophisticated lenders who later make material investments and who would likely screen the debtor for other risk factors such as cash flow, credit record, and asset ownership.
The terms and conditions of the documentation include a change of control clause, a negative pledge clause and a cross default provision.
Although the loan does not contain a negative pledge clause, the loan seniority is viewed the same as that on Mitsubishi's issued senior unsecured bonds.
The terms and conditions of the bond's documentation, which are applicable under English law, include a negative pledge clause and a cross default and cross acceleration provision.
The loan agreement contains a negative pledge clause and certain other
The bonds feature a negative pledge clause and a change of control put option.
The terms and conditions also include a negative pledge clause, which is in line with the company's EMTN programme.
The use of exit consents worked well in Ecuador in 2000, where exiting bondholders agreed to remove cross-default and negative pledge clauses. (3) Moreover, an exchange could be encouraged by a one-time financial enhancement from the official sector.