Indenture
Corporate Credit Analysis glossary · Credit Agreements & Covenants
Definition
The legal document governing a bond issue, executed between the issuer and a trustee; contains the covenant package, default provisions, and bondholder rights.
Indenture in plain English
An indenture is the big rulebook contract behind a bond — the official document that spells out everything the deal involves. It's signed between the company borrowing the money and a "trustee," a neutral middleman who represents all the bondholders (since there can be thousands of them scattered everywhere) and makes sure the company follows the rules. Inside it you'll find the promises the company must keep (covenants), what officially counts as breaking the deal (default provisions), and what rights you have as a lender if that happens. Think of it as the terms-and-conditions and referee agreement for the loan, all bundled into one legally binding document.
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Practice Indenture
A bond indenture allows the borrower to operate without… How should this covenant be classified?
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