The primary purpose of protective covenants is to

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Protective covenants are designed to safeguard bondholders' investments by minimizing the risk of default. Protective covenants limit the actions of bond issuers, protecting bondholders from actions that may lower their credit quality or default risk. They are included in bond indentures and outline the issuer's commitments as well as the rights and responsibilities of bondholders. Though some covenants may allow the issuer to call the bond or reduce price volatility, their primary purpose is to protect bondholders against actions that impede their ability to receive the principal and the interest payments that they are entitled to.

The Primary Purpose of Protective Covenants Is to