Definition of Trust indenture:
A trust indenture is an agreement in a bond contract made between a bond issuer and a trustee that represents the bondholder's interests by highlighting the rules and responsibilities that each party must adhere to. It may also indicate where the income stream for the bond is derived from.
Bonds are issued to lenders or investors to raise money for a corporation or governmental body. To issue a bond, the issuer hires a third-party trustee, usually a bank or trust company, to represent investors who buy the bond. The agreement entered into by the issuer, and the trustee is referred to as the trust indenture.
Type of bond indenture that includes provision for the appointment of trustees who act on behalf of the bondholders.
How to use Trust indenture in a sentence?
- A trust indenture is legal and binding bond contract made between a bond issuer and a trustee to protect the bondholder's interests.
- A trust indenture describes the bond's characteristics and the terms of its callability. It also delineates the amount of additional debt the issuer can assume, and the circumstances and procedures in case of issuer default.
- Most corporate bond issues over $5 million are required to include a trust indenture, and to file a copy of it with the SEC.
Meaning of Trust indenture & Trust indenture Definition