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 .
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

secured bond

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

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
500 Crore Secured Debentures Programme (Tranche 1) of HCL Tech.
Claude Resources Inc (TSX: CRJ) (AMEX: CGR), a Canada-based company that explores for mineral resources, has completed an offer to acquire a part of an outstanding 12% senior secured debentures of the company.
--Senior secured debentures revised to 'AA(bra)' from 'AA-(bra)';
11 November 2010 - DBRS on Wednesday gave a BBB ("low") rating with a "stable" outlook to the CAD200m (USD199.4m/EUR145.5m) 5.15% senior secured debentures issue, due on 16 November 2020, of Cogeco Cable Inc (TSE:CCA).
M2 EQUITYBITES-July 9, 2012--Radiant to issue secured debentures, bonus shares(C)2012 M2 COMMUNICATIONS
Fitch has not provided any rating uplift for the collateralisation on the senior secured debentures as their recovery prospects are considered to be average and comparable with those of the unsecured notes in a developing legal system.
Fitch has also assigned Kotagala's outstanding senior secured debentures a National Long-Term Rating of 'B+(lka)'.