Equipment Trust Certificate

Definition - What does Equipment Trust Certificate mean?

Equipment Trust Certificate is a bond backed by a pledge of large equipment, such as airplanes, railroad cars, and ships.

Testopedia explains Equipment Trust Certificate

Often when a corporation that engages in transportation or large construction needs to purchase equipment the corporation will borrow the money through the sale of bonds. The title to the large equipment (airplanes, railroad cars or large cranes) will be pledged as collateral for the bonds. The trustee will hold the title to the equipment and the bonds will be scheduled to be paid off at a rate that is faster than the depreciation of the equipment backing the bonds

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