What does a trust indenture for a revenue bond issue include?

A trust indenture for a revenue bond issue is a legal document that outlines the rights and responsibilities of the bondholders and the issuer. The correct choice highlights the presence of covenants included in the trust indenture that are specifically designed to protect the interests of bondholders.

These covenants can include agreements on how the revenue generated from the financed project will be used, restrictions on additional indebtedness, and requirements for maintaining certain financial ratios. These measures ensure that bondholders are prioritized in the allocation of funds and that the issuer adheres to specific financial practices that safeguard the bondholders' investments.

This component of the trust indenture is critical as it establishes a framework for compliance and accountability, ultimately providing reassurance to bond investors regarding the management of the bond proceeds and the revenue stream associated with the bonded project. Such protection is a key feature that distinguishes revenue bonds from other types of debt instruments.