A trustee protects the bondholders rights vis-à-vis the issuer. For the issuer the trustee acts as a single point of contact representing the bondholders.
Safer for the bondholders
The trustee protects the rights of the bondholders and monitors issuers’ performance of obligations pursuant to the bond agreement and may take action on behalf of all the bondholders, in a distressed situation.
Simpler for issuers
The issuer may relate to the trustee as a representative of all the bondholders, and may reject bondholders that make direct claims on the issuer. In the event of conflict or a demand for renegotiation, the issuer may discuss various options regarding procedure with the trustee in confidence.
Commercial Paper (Certificates)
The documentation for commercial papers is a simplified version of the documentation for bonds.