Uninsured Bond

Uninsured Bond

A bond on which payment is not guaranteed by a bond insurance company. An uninsured bond is not protected from default; that is, if the issuer states that it is unable to pay the bond, there is no recourse for bondholders to recoup their investment. Because of this added risk, uninsured bonds often carry a higher coupon rate than insured bonds.
References in periodicals archive ?
They found lower yields for insured bonds after the AHERF default but they also found a wider spread between the insured and uninsured bond yields and a lower proportion of insured bonds.
The most significant benefit of bond insurance is interest savings--the "spread" between an insured and an uninsured bond.
It also sees the government as ready to bailout senior bondholders in Credit Suisse and UBS but heavily downgrades ratings on subordinate debt on the assumption that, should the banks in Zurich get in trouble again, Geneva might take the radical Marxist action of letting investors in highly speculative uninsured bonds actually experience some capitalism.
In the variable rate demand market, there is still demand for uninsured bonds or bonds not tied to weak bond insurers, but only time will tell how this market will react to the newly strengthened bond insurers.