Equipment Trust Bond Law and Legal Definition

Equipment trust bond is a bond secured by tangible property, such as airplane, equipment or physical assets. It is usually issued by a transportation company such as a railroad or shipping line to secure payment, as the title for the equipment is held in trust for the holders of the issue. The trustee holds title to the equipment, which is leased to the issuer. When the debt is paid off, the equipment becomes the property of the issuer, as the title is transferred to the company.

Equipment trust bonds are also termed Equipment trust certificate.