Negative covenant

 

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Negative covenant

A bond covenant that limits or prohibits certain actions unless the bondholders agree.



Negative covenant

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N Negative Amortization

N Negative Amortization

A condition created when a loan payment is less than interest alone. Even though payments are made on time, the amount owing increases.


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A situation where the purchaser of a property has taken out a mortgage and some time after the purchase, the value of the property falls below the mortgage amount. For example:Purchase price of property: 80,000Deposit: 10,000Mortgage: 70,000If the value of the property falls below 70,000, the mortgage holder has negative equity in the property.


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A negative-NPV infrastructure development project that a local government requires of a company engaged in a positive NPV investment project elsewhere in the country.


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A bond covenant that requires the borrower to grant lenders a lien equivalent to any liens that may be granted in the future to any other currently unsecured lenders.


Further Suggestions

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