know how large of a role path dependency plays in bond indenture
Most bond indentures
also contained gold clauses, whereby the bond issuer stipulated the payment value of coupons and principal in gold.7 Of 1,794 bonds outstanding in the Poor's Manual of Railroads (1908), 63 percent, or 1,129 bonds, had coupons payable in gold.
Maturity should be a key variable in explaining the inclusion of explicit restrictive covenants in the bond indenture
. The model of Barnea, Haugen, & Senbet, (1980) suggests that long-term securities provide less discipline on borrowing firms.
First, covenants that are found in both private loan agreements and public bond indentures
are found more frequently in the former agreements.
ERCs in bond indentures
are an example of the restrictive covenant solution.
Some bond indentures
containing anti-takeover covenants have been written in such a way that the bonds are nonredeemable for a period of years.
First, bond indentures
tend to have less intense and less extensive covenants than the contracts of institutional lenders, particularly banks, (57) Some commentators suggest that this is because it is easier for the borrower to renegotiate violated covenants with a bank than with dispersed bondholders.
An essential feature of corporate bonds is that omission of a coupon payment precipitates bankruptcy (for a detailed treatment of the standard bond indenture
provisions, see Smith and Warner |22~).
* Many corporate bond indentures
contain sinking fund provisions.
IMPROVED DEBT STRUCTURE: IHFA took advantage of refinancing opportunities in their bond indentures
to reduce fixed and variable rate interest expense and to stabilize the cash flow outlook of the bond indentures
with a GO pledge.
The settlement agreement provided for payments of $35.5 million to the bondholders, in return for changes in important covenants in the bond indentures
These studies utilized daily bond returns, a two-day event window (days -1 and 0), and generally failed to account for the potential effect of differences in bond indentures
. Examples of this research include Asquith and Kim , Denis and McConnell , Lehn and Poulsen , and Cook and Martin .
Similarly, Symantec has a 90-day grace period under its bond indentures
to file its financial statements after a written notice from the Trustee.
The company's credit agreement and bond indentures
require PPG to file its financial statements with the Securities and Exchange Commission.
Each of the participants has executed a transmission service contract with SCPPA that govern the obligations of the project participants in addition to the bond indentures
. Participants are required to pay operating and fixed (including debt) costs of the project as outlined by an annual budget prepared by SCPPA.