Covenants are restrictions on the issuer included in an indenture that preserve the company's financial solvency and thus its ability to repay the debt. They provide protection to the lenders (the bond holders), so they are known as "protective covenants." One example of a protective covenant is a requirement that the company cannot acquire or sell major assets without prior approval of the creditor. The purchase of major assets could endanger the borrower’s current position and working capital. The sale of major assets could endanger profit generation or revenue creation in addition to removing assets that the lender could look to for repayment of the loan.
A warrant may be attached to a bond. When a warrant is attached to a bond, it gives the owner the option to buy stock in the company. It does not prevent the company from acquiring or selling major assets without prior creditor approval.
A call provision enables the company to pay off (redeem) the bond before its maturity date, usually at a premium to its face value. It does not prevent the company from acquiring or selling major assets without prior creditor approval.
A put option in a bond indenture gives the holder of the bond the right to sell, or "put" the bond back to the issuer prior to the bond's maturity date. A bond with this provision is called a "putable bond." For example, the indenture may state that the holder may put the bond after a certain date, at a certain price. If the bond pays an interest rate that is lower than the market rate, the holders will probably put the bond, get their money back, and reinvest the funds in something with a higher, market level of return. A put option in a bond indenture does not prevent the company from acquiring or selling major assets without prior creditor approval.
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