Hedge Fund Glossary

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Liens Covenant

a Covenant that restricts the incurrence of Liens and serves to protect the seniority position of debt by preventing more Secured Debt from either getting ahead (this is what unsecured Senior Notes are worried about) or becoming Pari Passu (this is what the Lenders under a secured Credit Agreement are worried about). Senior subordinated lenders will want protection that prevents Security over any other Subordinated Debt. See also Negative Pledge.

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