Affirmative Covenant

AAA

DEFINITION of 'Affirmative Covenant'

A type of promise or contract which requires a party to do something. For example, a bond covenant that provides that the issuer will maintain adequate levels of insurance or deliver audited financial statements is an affirmative covenant.

INVESTOPEDIA EXPLAINS 'Affirmative Covenant'

Affirmative (or positive) covenants can be compared to restrictive (or negative) covenants, which require a party not to do something, such as sell certain assets. In bond agreements, both affirmative and restrictive covenants are used to protect the interests of both issuer and bondholder.

RELATED TERMS
  1. Running With The Land

    The rights and covenants in a real estate deed that remain with ...
  2. Acceleration Clause

    A contract provision that allows a lender to require a borrower ...
  3. Restrictive Covenant

    Any type of agreement that requires the buyer to either take ...
  4. Acceleration Covenant

    A clause included in certain debt securities and swap agreements ...
  5. Covenant

    A promise in an indenture, or any other formal debt agreement, ...
  6. Negative Covenant

    A bond covenant preventing certain activities, unless agreed ...
Related Articles
  1. Will Corporate Debt Drag Your Stock ...
    Investing Basics

    Will Corporate Debt Drag Your Stock ...

  2. Advanced Bond Concepts
    Bonds & Fixed Income

    Advanced Bond Concepts

  3. Bond Basics Tutorial
    Retirement

    Bond Basics Tutorial

  4. Work For The Government? Top Retirement ...
    Retirement

    Work For The Government? Top Retirement ...

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center