DEFINITION of 'Open-End Indenture'

A clause in a revenue-bond agreement that permits the issuance of additional revenue bonds in the future, provided that the revenue of the previous year was sufficient enough to cover the costs of the new issue.

BREAKING DOWN 'Open-End Indenture'

This type of restriction in a bond agreement mainly serves to provide flexibility for the bond issuer, allowing it to alter its financing mix. However, by stipulating that previous revenue levels must cover any new issues of bonds, bondholders are assured a measure of safety.

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