Bond Indenture, Affirmative Covenant and Negative Covenant

What is BOND INDENTURE ?

- The contract that specifies the rights and obligations of the bond issuer and the bondholder of a fixed income security.

What is AFFIRMATIVE COVENANTS?

-In layman words, it is what the issuer MUST do. If the bond issuer fail to do it, it is considered default.

What is NEGATIVE COVENANTS?

- In layman words, it is what the issuer cannot do, is a restriction on the bond issuer.