Indenture
The contract between a bond's issuer and its holders, administered by a trustee: the terms, and the covenants constraining the borrower.
Where you will meet it
Indenture appears in 2 learning outcomes on the CFA syllabus. A few of them:
- Set out the core characteristics of a debt security
“The indenture is the legal contract setting out these terms along with covenants — affirmative ones requiring the issuer to act, negative ones restricting it.”
- Explain what a bond indenture is and the positive and restrictive covenants in it
“The indenture is the legal contract between issuer and bondholders, administered by a trustee acting on the holders' behalf.”
See also
Practise it
Practise indenture until it is automatic: questions that explain every wrong option.
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