Uninsured Bond

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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 ?
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.
Analyzing bond data in the early 1980's, Carpenter (1991) found that insured bonds had a yield 87 percent lower than uninsured bonds.
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.
For example, spreads for uninsured AAA-rated and AA-rated bonds were negative, meaning that the insured bonds actually had higher yields than the uninsured bonds.