The bond indenture is a legal document specifying the rights and obligations of both the issuing firm and the bondholders. It is designed to address all matters related to the bond issue, such as collateral, and call provisions.
A trustee represents the bondholders in all matters concerning the bond issue, including the monitoring of the issuing firm’s activities to assure compliance with the terms of the indenture.The issuer of a bond will use the indenture to describe the form of the bond, and the description will include enough detail about the issuer and the bond trustee for interested investors to research the background of the bond issue. Within the text of the bond indenture, there typically also are specifics about the repayment schedule that will be managed by the bond trustee.
