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A bond not registered with the SEC or other regulatory agency and privately placed with an investor. Because letter bonds are not registered, they are not allowed to be traded publicly. For this reason, when a letter bond is issued, the bondholder must send a letter to the SEC stating that he/she does not intend to resell the bond, and he/she has it only for long-term investment purposes. See also: Letter security.
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See restricted security.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.