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Financial Terms | |
Bond covenant |
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Definition of Bond covenantBond covenantA contractual provision in a bond indenture. A positive covenant requires certain actions, and
Related Terms:Positive covenant (of a bond)A bond covenant that specifies certain actions the firm must take. Also called Affirmative covenantA bond covenant that specifies certain actions the firm must take. Debt limitationA bond covenant that restricts in some way the firm's ability to incur additional indebtedness. Dividend limitationA bond covenant that restricts in some way the firm's ability to pay cash dividends. Limit priceMaximum price fluctuation Limitation on asset dispositionsA bond covenant that restricts in some way a firm's ability to sell major assets. Limitation on liensA bond covenant that restricts in some way a firm's ability to grant liens on its assets. ![]() Limitation on merger, consolidation, or saleA bond covenant that restricts in some way a firm's ability to Limitation on sale-and-leasebackA bond covenant that restricts in some way a firm's ability to enter into Limitation on subsidiary borrowingA bond covenant that restricts in some way a firm's ability to borrow at Negative covenantA bond covenant that limits or prohibits altogether certain actions unless the bondholders agree. Negative pledge clauseA bond covenant that requires the borrower to grant lenders a lien equivalent to any Accrual bondA bond on which interest accrues, but is not paid to the investor during the time of accrual. Bearer bondbonds that are not registered on the books of the issuer. Such bonds are held in physical form by Bondbonds are debt and are issued for a period of more than one year. The U.S. government, local BONDA long-term, interest-bearing promissory note that companies may use to borrow money for periods of time such as five, ten, or twenty years. ![]() BondA long-term debt instrument in which the issuer (borrower) is bondSecurity that obligates the issuer to make specified payments BondA financial asset taking the form of a promise by a borrower to repay a specified amount (the bond's face value) on a maturity date and to make fixed periodic interest payments. BondUsually a fixed interest security under which the issuer contracts to pay the lender a fixed principal amount at a stated date in the future, and a series of interest payments, either semi-annually or annually. Interest payments may vary through the life of bond. bondA debt security issued by a government or company. You receive regular interest payments at specified rates while you hold the bond and you receive the face value when it matures. Short-term bonds mature in less than five years; medium-term bonds mature in six to ten years; and long-term bonds mature in eleven years or greater. BondFixed interest security issued by a corporation or government, having a specific maturity date. Bond agreementA contract for privately placed debt. Bond-equivalent basisThe method used for computing the bond-equivalent yield. Bond equivalent yieldbond yield calculated on an annual percentage rate method. Differs from annual Bond-equivalent yieldThe annualized yield to maturity computed by doubling the semiannual yield. Bond Equivalent Yieldbond yield calculated on an annual percentage rate method Bond indentureThe contract that sets forth the promises of a corporate bond issuer and the rights of Bond indexingDesigning a portfolio so that its performance will match the performance of some bond index. Bond pointsA conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face Bond valueWith respect to convertible bonds, the value the security would have if it were not convertible BONDPARA system that monitors and evaluates the performance of a fixed-income portfolio , as well as the Bonds payableAmounts owed by the company that have been formalized by a legal document called a bond. Brady bondsbonds issued by emerging countries under a debt reduction plan. Bull-bear bondbond whose principal repayment is linked to the price of another security. The bonds are Bulldog bondForeign bond issue made in London. Callable bondA bond that allows the issuer to buy back the bond at a callable bondbond that may be repurchased by the issuer before maturity at specified call price. Canada Savings BondsA bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value. Collateral trust bondsA bond in which the issuer (often a holding company) grants investors a lien on Completion bondingInsurance that a construction contract will be successfully completed. Conflict between bondholders and stockholdersThese two groups may have interests in a corporation that convertible bondbond that the holder may exchange for a specified number of shares. Convertible bondsbonds that can be converted into common stock at the option of the holder. Convertible eurobondA eurobond that can be converted into another asset, often through exercise of Corporate bondsDebt obligations issued by corporations. Coupon BondAny bond with a coupon. Contrast with discount bond. CovenantsProvisions in a bond indenture or preferred stock agreement that require the bond or preferred CovenantsPromise usually made in a contract whereby a party to the contract promises to do or not to do specified things. Cushion bondsHigh-coupon bonds that sell at only at a moderate premium because they are callable at a Debenture bondAn unsecured bond whose holder has the claim of a general creditor on all assets of the Deep-discount bondA bond issued with a very low coupon or no coupon and selling at a price far below par Discount bondDebt sold for less than its principal value. If a discount bond pays no interest, it is called a Discount BondA bond with no coupons, priced below its face value; the return on this bond comes from the difference between its face value and its current price. Dollar bondsMunicipal revenue bonds for which quotes are given in dollar prices. Not to be confused with Dollar price of a bondPercentage of face value at which a bond is quoted. Equivalent bond yieldAnnual yield on a short-term, non-interest bearing security calculated so as to be EurobondA bond that is (1) underwritten by an international syndicate, (2) offered at issuance EurobondA debt security issued in a market other than the home market of eurobondbond that is marketed internationally. Eurodollar bondsEurobonds denominated in U.S.dollars. Euroyen bondsEurobonds denominated in Japanese yen. Extendable bondbond whose maturity can be extended at the option of the lender or issuer. Financial CovenantA feature of a debt or credit agreement that is designed to protect the lender or creditor. It is common to characterize covenants as either positive or negative covenants. Financial CovenantsA promise made related to financial conditions or events. Often a promise not to allow certain balance sheet items or ratios to fall below an agreed level. Usually found in loan documents, as a protection mechanism. Flower bondGovernment bonds that are acceptable at par in payment of federal estate taxes when owned by Foreign bondA bond issued on the domestic capital market of anther company. Foreign bond marketThat portion of the domestic bond market that represents issues floated by foreign Full coupon bondA bond with a coupon equal to the going market rate, thereby, the bond is selling at par. General obligation bondsMunicipal securities secured by the issuer's pledge of its full faith, credit, and Global bondsbonds that are designed so as to qualify for immediate trading in any domestic capital market Government bondSee: Government securities. High-coupon bond refundingRefunding of a high-coupon bond with a new, lower coupon bond. High-yield bondSee:junk bond. Income bondA bond on which the payment of interest is contingent on sufficient earnings. These bonds are Indexed bondbond whose payments are linked to an index, e.g. the consumer price index. Industrial revenue bond (IRB)bond issued by local government agencies on behalf of corporations. Insured bondA municipal bond backed both by the credit of the municipal issuer and by commercial International bondsA collective term that refers to global bonds, Eurobonds, and foreign bonds. Investment grade bondsA bond that is assigned a rating in the top four categories by commercial credit Junk bondA bond with a speculative credit rating of BB (S&P) or Ba (Moody's) or lower is a junk or high junk bondbond with a rating below Baa or BBB. Level-coupon bondbond with a stream of coupon payments that are the same throughout the life of the bond. Limited-tax general obligation bondA general obligation bond that is limited as to revenue sources. Loan CovenantsExpress stipulations included in loan agreements that are designed to monitor Long bondsbonds with a long current maturity. The "long bond" is the 30-year U.S. government bond. Long bondsbonds with a long current maturity. The "long bond" is the 30-year U.S. government bond. Low-coupon bond refundingRefunding of a low coupon bond with a new, higher coupon bond. Mismatch bondFloating rate note whose interest rate is reset at more frequent intervals than the rollover Mortgage bondA bond in which the issuer has granted the bondholders a lien against the pledged assets. Municipal bondState or local governments offer muni bonds or municipals, as they are called, to pay for Negative Loan CovenantsLoan covenants designed to limit a corporate borrower's behavior Positive Loan CovenantsLoan covenants expressing minimum and maximum financial measures Premium bondA bond that is selling for more than its par value. Prerefunded bondRefunded bond. Protective covenantA part of the indenture or loan agreement that limits certain actions a company takes protective covenantRestriction on a firm to protect bondholders. Pure-discount bondA bond that will make only one payment of principal and interest. Also called a zerocoupon Put bondA bond that the holder may choose either to exchange for par value at some date or to extend for a Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |