Bond trustees’ discretionary powers

Bond trustees are granted various discretionary powers under the terms of the trust deed.

These powers include the ability to modify the terms of the bonds without the consent of the bondholders. Such discretion can be exercised where, in the opinion of the bond trustee and subject to certain exceptions, the proposed modifications are:

1. •

   not 'materially prejudicial to the interests of the bondholders'

2. •

   to correct a manifest or proven error, or

3. •

   of a formal, minor or technical nature

However, this power is rarely exercised where the proposed amendments are material. For any proposed amendments that are substantive or material, it is likely that the trustee will seek to obtain the consent of the bondholders and, accordingly,