Negative pledge

A term used in loan documentation.

It is a promise not to create a class of creditor that ranks above the lender in priority for repayment.

Usually this means that, for an unsecured loan, the borrower promises not to grant security to another, subsequent lender.

See also

• Covenant
• Carve-out
• Grant
• Pari passu
• Pari passu clause
• Security