A contract between a bondholder and the issuer stating the obligations and restrictions of the issuer and also the rights of bondholders.
Affirmative covenants
Refer to what the issuer promises to do for the investor, e.g pay interest and principle in a timely manner; paying taxes and other expenses.
Negative covenants
Refer to the restriction on on the borrower, e.g.. issue additional securities or taking on additional debt that may harm the current bondholders.
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