negative pledge definition

negative pledge

Provision in an unsecured loan agreement that prevents the borrower from obtaining any secured loan without the consent of the unsecured lender. A bond indenture clause that prohibits the bond issuer from pledging its assets to a third party (thus reducing the level of security for the bondholders) is an example of a negative pledge.

negative pledge is in the Banking, Commerce & Finance, Investing and Securities & Futures Trading subjects.

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