Protective covenants prevent bond issuers from irresponsible over-borrowing behavior and are offered for the benefit of:

Question

Quizplus · Accepted Answer

Protective covenants are designed to protect the interests of bondholders by limiting the actions of issuers, such as restricting the amount of debt that can be issued or requiring the issuer to maintain a certain level of financial ratios. Therefore, the benefit is for bondholders.

Protective Covenants Prevent Bond Issuers from Irresponsible Over-Borrowing Behavior and Are