easy · Debt Capital Markets bond-instruments-structures
Which of the following describes a 'negative pledge' covenant in an investment-grade bond indenture?
- The issuer must keep its consolidated net leverage ratio below 3.0x as a financial maintenance test 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 strictly barred from incurring any further debt of any kind until each of its outstanding bonds has finally matured.
- The issuer may not pay any dividends to its common shareholders during any fiscal period in which its reported net income is negative.
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