14.5 The extra debt makes it more likely that the firm will not be able to make good on its prom- ised payments to its creditors. If the new debt is not junior to the already-issued debt, then the original bondholders suffer a loss when their bonds become more susceptible to default risk. A protective covenant limiting the amount of new debt that the firm can issue would have prevented this problem. Investors, having witnessed the problems of the RJR bondholders, generally demanded the covenant on future debt issues.