medium · Debt Capital Markets bond-instruments-structures
Which of the following describes a 'negative pledge' covenant in an investment-grade bond indenture?
- The issuer must maintain a leverage ratio below 3.0x at all times.
- The issuer cannot grant a lien on its assets to other creditors without providing equal security to the current bondholders.
- The issuer is forbidden from issuing any new debt until existing bonds mature.
- The issuer is prohibited from paying dividends if net income is negative.
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