The primary purpose of protective covenants is to help:

Question

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Protective covenants are put in place to protect bondholders from issuer actions. These covenants lay out specific requirements and limitations that the issuer must follow in order to mitigate risks for bondholders. This can include restrictions on the issuer's ability to incur additional debt, limitations on dividends and other distributions, and requirements for maintaining certain financial ratios. The ultimate goal is to ensure that bondholders receive their interest and principal payments as promised, and that their investments are not put at undue risk.

The Primary Purpose of Protective Covenants Is to Help