what are the conditions imposed on a debt issuer that are designed to protect bondholders called? protective covenants?
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- A protective covenant is used in a bond indenture, a legal contract between the issuer and bondholders, the details of which vary from bond issue to issue and from company to company. Protective covenants generally include provisions that restrict specific financial policies of the firm.
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Condominium The declaration of covenants, conditions and restrictions is a legal document that sets forth the regulations for owners of units in a condominium. This document defines acceptable use of the unit. It describes the owner's use of limited common areas and general common areas.
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- DEFINITION of 'Covered Bond'. Securities created from public sector loans or mortgage loans where the security is backed by a separate group of loans.
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Bond (finance) This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the second market. Thus, a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure.
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- Security for Obligations. As security for the payment and. performance of all of the Obligations, the Pledging Bank hereby delivers to the Treasurer. the Collateral and agrees that the Treasurer may draw upon any Letter of Credit or. receive payments under any Insurance Policy from time to time as provided in this.
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Indenture Specifies legal obligations of bond issuer and rights of bondholders. An indenture spells out the specific terms of a bond, as well as the rights and responsibilities of both the issuer of the security and the holder.
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- Learn more about evaluating a municipal bond’s default risk. • Call Risk — the risk that a callable bond may be redeemed by the issuer prior to maturity. Most municipal bonds have a call provision entitling the issuer to redeem the bond at a specified price on a date prior to maturity. This generally would occur if the current interest rates are lower than they were at the time the investor purchased the bonds (unless the investor purchased the bonds at a premium).
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What is a 'Secured Bond' A type of bond that is secured by the issuer's pledge of a specific asset, which is a form of collateral on the loan. In the event of a default, the bond issuer passes title of the asset or the money that has been set aside onto the bondholders.
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secured bond secured bond. Definition. Bond backed by collateral, such as a mortgage or lien, the title to which would be transferred to the bondholders in the event of default. The most common form of secured bonds are mortgage bonds. These bonds are backed by real estate or physical equipment that can be liquidated.
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Hard call protection Hard call protection. Definition: Usually refers to callable bonds. The period of time when a bond cannot be called, no matter what the interest rate is. That is, if the interest rate falls sharply, most callable bonds will be called (so the bond issuer can reissue at a lower interest rate). Hard call protection ensures that the holder of the bond can benefit when rates fall. Nearby Terms Hands-on investor Hang Seng index Hard call protection Hard capital rationing Hard currency
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Understanding Defeased Muni Bonds In the event of default, investors' positions are secured not by the assets of the issuer, but by the assets held in the escrow account or trust estate. Bonds can be legally defeased if the assets securing them are either direct obligations or fully guaranteed by the U.S. government.
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- Loading the player... A type of surety bond used by investors in construction projects to protect against an adverse event that causes disruptions, failure to complete the project due to insolvency of the builder(s), or the job's failure to meet contract specifications.
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- Definition of DEBT SECURITY: A debt instrument that is issued with a repayment promise on a date at a specific interest The Law Dictionary Featuring Black's Law Dictionary Free Online Legal Dictionary 2nd Ed.
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- show more I have 9 bites on me right now, probably more, but I haven't been outside since two nights ago when I went to a drive-in. So it's been a day and a half and I'm still discovering itchy, red, swollen bumps. My boyfriend who went with me had some yesterday evening.
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DEFINITION of 'Hard Call Protection' DEFINITION of 'Hard Call Protection' The period in the life of a callable bond during which the issuing company is not permitted to redeem the bond.
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What is a 'Debt Issue' Debt Issue. What is a 'Debt Issue'. A debt issue is a fixed corporate or government obligation, such as a bond or debenture. A debt issue is a financial obligation that allows the issuer to raise funds by promising to repay the lender at a certain point in the future and in accordance with the terms of the contract.
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What is a corporate bond? In a bankruptcy, bond investors have priority. over shareholders in claims on the company’s assets. like all investments, bonds carry risks. one key risk to a. bondholder is that the company may fail to make timely. payments of interest or principal. If that happens, the. company will default on its bonds.
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Real Estate Covenants Law and Legal Definition Mutual covenants among members of a homeowners association are promises to respect the rules of conduct or restrictions on use of property, which govern peaceful use, limitations on intrusive construction, etc., and are usually part of the recorded covenants, conditions and restrictions which govern a development or condominium project.
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Collateralized mortgage obligation Another way to enhance credit protection is to issue bonds that pay a lower interest rate than the underlying mortgages. For example, if the weighted average interest rate of the mortgage pool is 7%, the CMO issuer could choose to issue bonds that pay a 5% coupon.
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Definition of covered bond A bond backed by assets such as mortgage loans (covered mortgage bond). Covered bonds are backed by pools of mortgages that remain on the issuer's balance sheet, as opposed to mortgage-backed securities such as collateralised mortgage obligations (CMOs), where the assets are taken off the balance sheet. Print.
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Collateralized mortgage obligation Another way to enhance credit protection is to issue bonds that pay a lower interest rate than the underlying mortgages. For example, if the weighted average interest rate of the mortgage pool is 7%, the CMO issuer could choose to issue bonds that pay a 5% coupon. The additional interest, referred to as excess spread, is placed into a spread account until some or all of the bonds in the deal mature.
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- Investors should also be aware of special or extraordinary redemption provisions. These are provisions that give a bond issuer the right to call the bonds due to a one-time occurrence, such as a natural disaster, interruption to a revenue source, unexpended bond proceed, or canceled projects.
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Definitions &Translations The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can also place the borrower under additional restrictions known as loan covenants.
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Debt bondage Debt bondage (also known as debt slavery or bonded labor) is a person's pledge of their labor or services as security for the repayment for a debt or other obligation. The services required to repay the debt may be undefined, and the services' duration may be undefined.
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restrictive covenant A restrictive covenant is a clause in a deed or lease to real property that limits what the owner of the land or lease can do with the property. Restrictive covenants allow surrounding property owners, who have similar covenants in their deeds, to enforce the terms of the covenants in a court of law.