What is a Negative Pledge?

Definition:

In an Indenture or loan agreement (or a document creating security thereunder), a promise from the issuer/borrower to the bondholder/lender stating that it will not grant a security interest to another creditor that would negatively affect the bondholder/lender in the future, such as a change in Priority or a reduction of collateral available to the bondholder/lender.

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