Closed-End Indenture

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Closed-End Indenture

A provision in an indenture stating that the collateral securing a bond may not secure any other bond issues. A closed-end indenture means that the issuer may only use the stated collateral on a single bond issue; this ensures that only bondholders of that issue have a claim to that collateral in the event of default. As a result, a secured bond with a closed-end indenture carries less risk than a secured bond with an open-end indenture, which allows collateral to secure multiple bonds.
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