limitation on sale-and-leaseback

Definition

A bond covenant that prohibits the issuer from entering sale-and-leaseback transactions. A sale-and-leaseback transaction is where the firm sells a fixed asset and the purchaser rents it back to the selling company. This stipulation is provided for in the bond since a sale-and-leaseback transaction increases the bond's risk.
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limitation on merger, consolidation, or sale limitation on subsidiary borrowing