Final answer:
The provision requiring issuers to repurchase a portion of their outstanding bond issue each year is known as a sinking fund provision. It provides security for bondholders and reduces the debt load for issuers.
Step-by-step explanation:
A provision in the indenture agreement that requires issuers to call, or repurchase on the open market, a portion of the outstanding bond issue each year is known as a sinking fund provision. This is a method used by bond issuers to secure a bond by buying back a portion of the bond issue before maturity. It not only reduces credit risk associated with the bond but also helps in reassurance to the bondholders about the company's creditworthiness. A sinking fund provision is particularly beneficial for investors as it implies a level of safety encouraging investment in the company's bonds. It can also be favorable for the issuing company as it reduces the debt load progressively, thereby potentially improving its credit rating and reducing the risk of default.