Back to basics
We take you back to the credit basics to review everything you thought you already knew but were too afraid to ask..
Bond covenants are legally binding provisions in a bond indenture designed to protect the interests of the bondholders. Covenants specifically address activity that, if left unchecked, could be detrimental to the value of the bonds or put at risk their eventual repayment at par value. In essence, covenants provide a valuable means of reducing the risk of bonds. The basic idea behind bond covenants is to protect the bond from losing value in the following ways:
- by selling or transferring
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