Why do the issuers of bonds not seek to minimize the strength and number of covenants in a bond agreement?

Question

Quizplus · Accepted Answer

More covenants generally make a bond safer for investors, as they restrict the issuer's actions in ways that are intended to protect the bondholders' interests. This increased safety can lead to a lower interest rate, as investors are willing to accept a lower return for a perceived lower risk.

Why Do the Issuers of Bonds Not Seek to Minimize