Bond Indenture (Trust Indenture)
Corporate Credit Analysis glossary · Credit Agreements & Covenants
Definition
The legal contract governing a bond issue, executed between issuer and trustee, specifying covenants, events of default, redemption terms, and bondholder rights. The High Yield indenture is the analyst's primary covenant-analysis document.
Bond Indenture (Trust Indenture) in plain English
When a company borrows by issuing a bond, the indenture is the big rulebook contract that spells out the deal — how much gets paid back, when, what the company promises NOT to do (called covenants), and what counts as breaking the deal. Because bondholders are scattered and can't each negotiate, a neutral 'trustee' holds the contract and enforces it on their behalf, like a referee. For an analyst, this document is the main thing you read closely, because the fine print — especially in riskier 'high-yield' bonds — is where the real protections (or dangerous loopholes) live.
Also called: Trust Indenture
Practice Bond Indenture (Trust Indenture)
A bond indenture allows the borrower to operate without… How should this covenant be classified?
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