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The article reports on the issues of personal covenant repayment of loan advance and consolidation of loan documents under an all-moneys mortgage which both agitate indefeasibility in Australia. It mentions the significance of the first issue in forged mortgage cases that allows a mortgagee to pursue a mortgager and request deficit between land value on sale and debt under the loan agreement. The second on the other hand involves reliance placed on a collateral loan agreement.

The public debt contracts surveyed in Whittred and Zimmer (1986) and Stokes and Tay (1988) were issued between 1962 and 1985, and there has been significant macroeconomic, institutional and regulatory change since that time. We analyse a sample of 36 recently issued Australian public debt contracts and document a considerable change in the ‘package’ of financial covenants used in public debt contracts. The covenant package is now less restrictive and the types of covenants used are more heterogenous. We also survey a sample of 41 recent Australian private debt contracts. These contracts contain a greater number, variety and, collectively, more restrictive set of financial covenants than those public debt contracts we survey, supporting theory which suggests that covenant restrictive and renegotiation–flexible contracts are more suited to borrowers contracting with financial intermediaries in private debt markets. We also note differences in accounting rules associated with financial covenants used in these private debt contracts. [ABSTRACT FROM AUTHOR]