letter bond
Noun: A letter bond is a type of debt security (bond) that has not been registered with the U.S. Securities and Exchange Commission (SEC). Because it is unregistered, it cannot be offered or sold to the general public. It is typically sold directly to a specific, qualified investor or a small group of such investors, often through a private placement.
This term is used specifically in the context of finance, investments, and securities regulation. It describes a bond with legal restrictions on its sale and ownership transfer.
Examples: * The institutional investor purchased a letter bond as part of a private placement deal. * Due to its status as a letter bond, the security cannot be resold on the open market. * The company issued letter bonds to raise capital from a select number of accredited investors.
- "To hold a letter bond": To be the owner of such a restricted security.
- The fund continues to hold the letter bond until its maturity date.
- "Letter bond agreement": Refers to the contractual terms governing the private sale of the bond, which includes the investor's promise (the "letter") not to resell it publicly.
- The letter bond agreement stipulated that the investor was a qualified institutional buyer.
- Private Placement Bond: A broader term for debt securities sold directly to investors without a public offering. A letter bond is a type of private placement bond.
- Restricted Security: A general category for securities, including letter bonds, that have limitations on their resale.
- 144A Bond: A type of private placement bond that can be traded among qualified institutional buyers in the U.S., offering more liquidity than a traditional letter bond.
- Unregistered Bond
- Private Placement Bond (contextual synonym)
- Restricted Bond
The core meaning of "letter bond" centers on its legal status (unregistered with the SEC) and the resulting transfer restriction (cannot be sold to the general public). The name originates from the "letter" or investment letter that the purchaser signs, stating the bond is being bought for investment purposes and not for public resale.
- a bond that has not been registered with the Securities and Exchange Commission and cannot be sold to the general public