Shareholder David J. Fernandez discusses the role of bond trustees in The Bond Buyer article, "Why Bond Trustees Are Often Frustrated, Powerless in Today's Debt Environment."
“The role of the trustee is finally getting some attention,” Fernandez said. “They are the most ignored member of the deal team.”
Fernandez, a longtime trustee counsel, said that trustees are generally selected by issuers via a competitive bidding process that results in very low fees for their work and are often brought to the table after all the bond documents, including the crucial indenture that governs them, have already been written.Fernandez said this treatment of a trustee can result in simply a “cursory” review of the documents that later leads to confusion about what is expected of them. Fernandez added that when a trustee is viewed as being asleep at the wheel, it is often the case that they were brought in late and that any suggestions the trustee firm had about what to put in the indenture were ignored.
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