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collateral trust bond

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Collateral Trust Bond
A bond that is secured by a financial asset - such as stock or other bonds - that is deposited and held by a trustee for the holders of the bond.

Notes:
If the issuing company were to default on the debt obligation, the debt holders would receive the securities held in trust, like collateral for a loan.

For example, say Company A issues a collateral trust bond, and as collateral for the bond it includes the right to Company A shares held by a trust company. If Company A were to default on the bond payments, the bondholders would be entitled to the shares held in trust.


collateral trust bond
A long-term debt obligation with a claim against securities rather than against physical assets. This type of bond is issued primarily by holding companies that own mainly securities of subsidiaries.

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The first collateral trust bonds were issued in two series: $300 million with a 4.
The new issue will be secured with a like amount of first mortgage bonds (FMBs) of PSCO, and thus will rank equally with all outstanding FMBs and collateral trust bonds (CTBs).
Wednesday announced that it has commenced an offer to exchange its outstanding $140 million principal amount of First Collateral Trust Bonds, 7 1/2% Series A Due 2008, for an equal principal amount of First Collateral Trust Bonds, 7 1/2% Series B Due 2008, which have been registered with the Securities and Exchange Commission.
 
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