What is Bond Indenture?

Bond Indenture is a contract between the bond issuer and the bond purchaser (bondholder) that specifies the terms of the bond. Typically, it states the coupon rate, maturity dates, and other terms and conditions of the bond issue that may be contextually relevant. If the bond issuer breaches the agreed upon contract (e.g. fails to meet required payments) results in harsh penalties, such as liquidation of the issuer's assets.