Who administers the bond indenture?

The bond indenture is a legal agreement that outlines the terms, rights, and responsibilities associated with a bond issuance. The correct answer, a trustee, plays a vital role in this context.

The trustee is often a bank or a trust company appointed by the bondholders to represent their interests. Their responsibilities include ensuring that the bond issuer adheres to the terms set forth in the indenture, such as making timely interest and principal payments. Additionally, the trustee acts as a mediator between the bondholders and the issuer, providing protection for the investors by overseeing compliance and managing any potential defaults.

While the bond issuer creates the indenture and is bound by its terms, they do not manage it independently. Financial advisors may assist in structuring the bonds or advising on investments but do not have a direct administrative role concerning the indenture. Stockholders, on the other hand, are typically involved in company ownership and equity and are not related to bond indentures, which deal specifically with debt. Thus, the trustee is the correct administrator of the bond indenture, ensuring both parties fulfill their obligations.