Investor or issuer?
Investor - precludes the issuer from issuing more debt, paying down debt that’s not yours, spending too much on CAPEX, yada yada.
investor i think
Definitely investor - both negative and affirmative covenants are good for the investor.
good for investor… tells a company they cant do certain things while your debt is outstanding… like skillionare said, issue new debt
Issue new debt Pay out dividends (PE firms love to do this shit if you don’t stop them) Spend too much on CAPEX Sell assets without paying down (at minimum) a pro-rata share of your debt Let your leverage ratio get too high Let your interest coverage ratio get to low This stuff is right in my wheelhouse, I could go on for days…but those are the most common that I can think of off of the top of my head.
Right everyone…Thanks skillionaire…both negative and affirmative covenants are good for the investor.