indenture investment & finance definition

A written agreement between a company and its lender that spells out the terms of the debt issue. The terms include the amount of bonds issued and their type, the interest rate that is paid, a description of the property that is being used as collateral, repayment provisions, and call provisions in the event that a company wants to redeem the bond before it matures. The indenture also lists any financial covenants that the company has to follow, such as maximum debt level ratios or minimum cash flow.