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Negative Pledge Clause
What does it mean?
A negative covenant in an indenture stating that the corporation will not pledge any of its assets if doing so gives the lenders less security. Can also be referred to as a "covenant of equal coverage".
In Other Words...
Negative pledge clause is just another way for debtholders to protect their investment.
Related Links
Bond Basics Tutorial - What are bonds and do they belong in your portfolio? Get all the answers in this comprehensive tutorial.
Related Terms
Covenant | Indenture | Negative Covenant
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