A provision in some
bond indentures prohibiting or curtailing the
issuer's ability to enter
sale-and-leaseback agreements. A sale-and-leaseback agreement is an arrangement whereby a company
sells a
fixed asset to a
bank or other institution and then
rents it back and maintains
usufruct of the asset. This increases the debt-to-asset ratio, which is usually seen as negative. It may be used when a company cannot otherwise obtain
financing; in either case it can increase the
risk to the bond, and so some bond indentures limit the use of sale and leasebacks.