equipment trust certificate

Equipment Trust Certificate

A debt instrument that allows a company to take possession of an asset and pay for it over time. The debt issue is secured by the equipment or physical assets, as the title for the equipment is held in trust for the holders of the issue. When the debt is paid off, the equipment becomes the property of the issuer, as the title is transfered to the company.

Notes:

These certificates were originally used to finance railway box-cars, and the box-cars were used as collateral. Nowadays, equipment trust certificates are used to finance containers used for shipping and offshore businesses.

See also: Collateral, Debt, Offshore, Secured Debt, Tangible Asset, Trust

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equipment trust certificate

An intermediate- to long-term security that pays a fixed return based on payments received from the lease of equipment. These certificates are frequently used by railroads and airlines to finance rolling stock and aircraft, respectively.