What is a bond and bond indenture?

A bond indenture agreement is a contract or legal document that records the obligations of the bond issuer and the benefits that will be given to the bondholder. A bond indenture may also be called a bond resolution, a bond contract, or a deed of trust. A bond indenture is a contract that is blanket and unconditional.

Why is bond indenture important?

It helps to protect the stakeholders’ interest, as well as lower the chances of default. The indenture lists all the features and details of a bond. It makes sure that the stakeholders know all the covenants, and thus help to maintain transparency. It is a go-to document in case of any dispute.

What is the difference between an indenture bond and a debenture?

A bond indenture is the legal contract between the issuer and the bondholders. It also specifies how often interest is paid. A bond debenture refers to a bond that is unsecured. When a bond is sold at a premium, it means that a company issues bonds with a contract rate greater than the market rate.

What is the difference between an indenture and a deed?

As nouns the difference between indenture and deed is that indenture is (legal) a contract which binds a person to work for another, under specified conditions, for a specified time (often as an apprentice) while deed is an action or act; something that is done.

What are included in bond indenture?

A bond indenture is the contract associated with a bond. The terms of a bond indenture include a description of the bond features, restrictions placed on the issuer, and the actions that will be triggered if the issuer fails to make timely payments. The dates when interest payments will be made to bondholders.

How can a bond indenture protect the investor?

Congress passed the Trust Indenture Act of 1939 to protect bond investors. It prohibits the sale of any debt securities in a public offering unless they are issued under a qualified indenture.

What is a bond 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.

What are indentures and debentures?

is that debenture is a certificate that certifies an amount of money owed to someone; a certificate of indebtedness while indenture is (legal) a contract which binds a person to work for another, under specified conditions, for a specified time (often as an apprentice).

Could indentured servants marry?

Indentured servants could not get married until after their term of service, which was usually seven years. Many indentured servants were in their teen years or early twenties when they began their contract, and so they tended to marry later than free people, usually around the age of thirty.

What is an indenture bond?

An indenture is a legal and binding contract usually associated with bond agreements, real estate, or bankruptcy. An indenture provides detailed information on terms, clauses, and covenants.

What does an indenture trustee do?

A person that manages the relationship between an issuer and holders of the issuer’s securities, usually when those securities have features requiring more administrative involvement than in the case of equity securities such as, for example, debt obligations or warrants.