What is a bond indenture?

A bond indenture is a legal contract between a bond issuer and bondholders that outlines the terms and conditions of a bond issuance. It typically includes details such as the interest rate, maturity date, repayment schedule, and any covenants that the issuer must adhere to.

The indenture also specifies the rights and responsibilities of both the issuer and the bondholders, as well as any provisions for default or early redemption. It is a crucial document that governs the relationship between the parties involved in a bond issuance and provides protection for investors.

Bond indentures are usually drafted by legal professionals and are often registered with the appropriate regulatory authorities to ensure compliance with securities laws. They are designed to provide transparency and clarity regarding the terms of the bond issuance, helping to mitigate risks for both parties.