TLDR:
Protective provisions in bond issues, including equal and ratable security, and prohibiting new prior liens, are important for added safety. Working capital requirements and penalties for nonobservance are suggested for industrial bond indentures. Investment trust bonds require protective provisions such as maintaining asset value over debt. The article recommends that investors should demand strict enforcement in bond indentures for investment-trust issues. Sinking funds provide benefits but pose enforcement challenges. Insisting on protective covenants adds to safety in bond investment. However, there is a lack of uniformity in protective provisions. While protective covenants add safety, they do not guarantee it.