Answer: limit on the issuance of additional debt.

## Explanation Negative bond covenants (also called restrictive covenants) are provisions that restrict or prohibit certain actions by the issuer. They are designed to protect bondholders by limiting activities that could impair the issuer's ability to repay debt. Let's analyze each option: **A. Promise to pay required taxes** - This is an **affirmative covenant** (positive covenant), not a negative covenant. Affirmative covenants require the issuer to take certain actions, such as paying taxes, maintaining insurance, or providing financial statements. **B. Limit on the issuance of additional debt** - This is a **negative covenant**. It restricts the issuer from taking on additional debt beyond specified limits, which protects existing bondholders from dilution of their claims and ensures the issuer doesn't become overleveraged. **C. Requirement to comply with existing laws and regulations** - This is also an **affirmative covenant**. It requires the issuer to comply with laws and regulations, which is a positive obligation rather than a restriction. ### Key Distinction: - **Negative/Restrictive Covenants**: Limit or prohibit certain actions (e.g., limits on additional debt, dividend restrictions, asset sales restrictions) - **Affirmative/Positive Covenants**: Require the issuer to take certain actions (e.g., pay taxes, maintain insurance, provide financial statements) Therefore, only option B represents a negative bond covenant.

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