Okuzeka
Finance & Banking vocabulary · Loans & Credit

Negative pledge

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, negative pledge means: A covenant restricting a borrower's ability to grant security over assets to other creditors.

In Turkish: teminat vermeme taahhüdü

How it is used

It is a contractual restriction, not itself a security interest; exceptions depend on the wording.

Example sentences

  1. The negative pledge limited the company's ability to mortgage its warehouse.

    The restriction protects the lender's position against later secured creditors.

  2. Counsel checked whether the proposed lien fell within a negative pledge exception.

    The clause's exceptions determine whether specific security is permitted.

Common collocations

  • negative pledge clause
  • negative pledge covenant
  • covenantA promise in a loan or bond agreement that the borrower will or will not do certain things, such as keeping its debt below a set level.
  • collateralAn asset, such as property, cash or securities, that a borrower pledges to a lender and that the lender can sell if the loan is not repaid.

More terms: Loans & Credit

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This page explains English vocabulary for learners. It is not financial advice.