Bond Trustee

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DEFINITION of 'Bond Trustee'

A financial institution with trust powers, such as a commercial bank or trust company, that is given fiduciary powers by a bond issuer to enforce the terms of a bond indenture. An indenture is a contract between a bond issuer and a bond holder. A trustee sees that bond interest payments are made as scheduled, and protects the interests of the bondholders if the issuer defaults.



INVESTOPEDIA EXPLAINS 'Bond Trustee'

The bond trustee is responsible for the registration, transfer and payment of bonds. The bond trustee is required to maintain separate accounts, monitor bond document requirements and provide monthly statements. The bond trustee approves amendments to some documents and acts on behalf of the bondholders if the borrower or issuer violates certain bond documents. A bond trustee must have adequate staff and systems to efficiently perform its duties and comply with the various federal, state and bond issue requirements.

RELATED TERMS
  1. Indenture

    A legal and binding contract between a bond issuer and the bondholders.
  2. Trust

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  3. Commercial Bank

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  4. Trust Indenture

    An agreement in the bond contract made between a bond issuer ...
  5. Trustee

    A person or firm that holds or administers property or assets ...
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