LeoGlossary: Technical Default (Bonds)

How to get a Hive Account


Technical defaults occur when an issuer fails to meet the requirements of a bond covenant other than making payments. Often, these defaults do not lead to a loss for the bondholder and can be remedied with policy changes, such as authorizing more funding.

For example, a municipality’s revenue bond covenant may require keeping up building maintenance. A failure to meet code would result in a technical default, even if the municipality was making regular payments to bondholders.

General:

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