Definitions for "Bond Covenant"
The issuer's enforceable promise to perform or refrain from performing certain actions.  With respect to municipal securities, covenants are generally stated in the bond contract.  Covenants commonly made in connection with a bond issue may include covenants to charge fees sufficient to provide required pledged revenues (called a “rate covenant”); to maintain casualty insurance on the project; to complete, maintain and operate the project; not to sell or encumber the project; not to issue parity bonds unless certain tests are met (called an “ additional bonds covenant”); and not to take actions that would cause the bonds to be arbitrage bonds.  A covenant whereby the issuer is affirmatively obligated to undertake a duty in order to protect the interests of bondholders ( e.g., to maintain insurance) is called a “protective covenant.”  A covenant whereby the issuer obligates itself to refrain from performing certain actions ( e.g., not to sell the project) is called a “negative covenant.
a contractual provision in the bond
Keywords:  equivalent, basis, indexing
Bond equivalent basis Bond indexing