A bond contract (bond indenture or trust indenture) that guarantees allows the use of the collateral securing a bond again as a security supporting another bond issue. An indenture is a legal and binding provision usually embedded in bond agreements, real estate, or bankruptcy cases. Additional bonds may be issued in the future for expansion of an existing project or line of production, etc. Typically, issuance of additional bonds is usually subject to certain earnings tests.
A open-end indenture implies that the issuer may use the specified collateral on more than a bond issue. The issuer is permitted to issue additional bonds that are secured by the same claim on the same collateralized assets associated with the original issue (as opposed to closed-end indenture).
