Secured bond

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Secured bond

A bond backed by the pledge of collateral, a mortgage, or other lien, as opposed to an unsecured bond, called a debenture .

Secured Bond

A bond with collateral. That is, the issuer pledges a property or other asset to the bondholders and states that they may take ownership if the issuer defaults. For example, a municipality may secure a bond with future receipts on property taxes. Likewise, a company may secure its bonds with a factory. Secured bonds carry less risk than unsecured bonds and therefore have lower coupon rates, which reduces the issuer's borrowing costs. All secured bonds must be repaid before any unsecured bonds are repaid.

secured bond

A bond that is guaranteed with a pledge of assets. A bond might be secured with real estate.

Secured bond.

The issuer of a bond or other debt security may guarantee, or secure, the bond by pledging, or assigning, collateral to investors. If the issuer defaults, the investors may take possession of the collateral.

A mortgage-backed bond is an example of a secured issue, since the underlying mortgages can be foreclosed and the properties sold to recover some of or all the amount of the bond.

Holders of secured bonds are at the top of the pecking order if an issuer misses an interest payment or defaults on repayment of principal.

References in periodicals archive ?
In addition to previously outstanding TFA future tax secured bonds, the payment of building aid is also subject and subordinate to certain other limited prior statutory and state constitutional claims on education aid, of which building aid is a part.
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The company said it had issued a senior secured bond loan of EUR100,000,000 on 8 April 2019, within a total framework amount of EUR 150,000,000, on the Nordic bond market.
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International Resource News-November 23, 2011--Petroquimica de Venezuela, SA launches tender offer and consent solicitation for 8.29 percent Secured Bonds due 2020(C)1994-2011 ENPublishing - http://www.enpublishing.co.uk