Closed-End Indenture


DEFINITION of 'Closed-End Indenture'

A term in a bond contract that guarantees that the collateral used to back the bond issue cannot be used again to back another bond issue. This is the opposite of an open-end indenture in which more than one bond can be backed by a single collateral.

BREAKING DOWN 'Closed-End Indenture'

If the bond issuer defaults, a closed-end indenture ensures the bondholders will have the only claims on collateral, making their bonds the most senior security. The fewer claims that exist on the collateral, the more safety a bondholder has.

  1. Bond

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  2. Indenture

    A legal and binding contract between a bond issuer and the bondholders.
  3. Negative Pledge Clause

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  4. Negative Covenant

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  5. Senior Security

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  6. Open-End Indenture

    A clause in a revenue-bond agreement that permits the issuance ...
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