Wednesday, September 2, 2009

What is a Bond Indenture?

A bond indenture is a written agreement between the company (the borrower) and the bondholders (the lenders/creditors) and generally includes:  

  • The basic terms of the bonds  
  • Face value, 
  • coupon rate, 
  • Maturity, etc  
  • The total amount of bonds issued  
  • A description of property used as security, if applicable 
The bond indenture may also describes collateral (bonds, stocks, etc) and/or mortgage (real property, i.e., land, buildings, etc) used as pledge for repayment.

Bond Call provisions give the issuer the option to repurchase the bond at a specific price prior to maturity.

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The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.