Bond Trustee


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.

BREAKING DOWN '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.

  1. Indenture

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

    A fiduciary relationship in which one party, known as a trustor, ...
  3. Commercial Bank

    A financial institution that provides services, such as accepting ...
  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 ...
  6. Cost Of Funds

    The interest rate paid by financial institutions for the funds ...
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  1. What is an indenture for a fixed income security?

    An indenture for a fixed-income security, also known as a bond indenture or trust indenture, is a contract that sets forth ... Read Full Answer >>
  2. Do banks have working capital?

    The concept of working capital does not apply to banks since financial institutions do not have typical current assets and ... Read Full Answer >>
  3. How does investment banking differ from commercial banking?

    Investment banking and commercial banking are two primary segments of the banking industry. Investment banks facilitate the ... Read Full Answer >>
  4. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  5. What role does a correspondent bank play in an international transaction?

    A correspondent bank is most typically used in international buy, sell or money transfer transactions to facilitate foreign ... Read Full Answer >>
  6. What is the difference between a correspondent bank and intermediary bank?

    Correspondent and intermediary banks serve as third-party banks that coordinate with beneficiary banks to facilitate international ... Read Full Answer >>

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