Definition

Noun: A type of bond issued by a debtor where the repayment to the bondholder is guaranteed by specific assets or collateral. If the issuer defaults on its payments, the bondholders have a claim to the pledged assets.

Usage

A "secured bond" provides investors with a lower level of risk compared to an unsecured bond because it is backed by collateral. - The company issued a secured bond backed by its real estate holdings to finance the new factory. - Investors seeking safety often prefer secured bonds over unsecured debentures.

Advanced Usage

• Legal Context: In corporate finance and bankruptcy proceedings, holders of secured bonds are considered secured creditors and have priority over unsecured creditors in claims on the issuer's assets.
• Investment Analysis: The value and safety of a secured bond are directly tied to the market value and liquidity of the underlying collateral.

Variants and Related Words

• Debenture: An unsecured bond that is not backed by specific collateral.
• Mortgage Bond: A common type of secured bond where real estate is used as the collateral.
• Collateral Trust Bond: A secured bond where financial assets, like stocks or other bonds, are pledged as collateral.
• Equipment Trust Certificate: A secured bond where physical equipment (e.g., airplanes, railcars) serves as the collateral.

Synonyms

• Guaranteed bond
• Collateralized bond

Antonyms

• Unsecured bond
• Debenture

Related Phrases

• "Backed by collateral": This phrase is the defining characteristic of a secured bond.
  • The loan was a secured bond backed by collateral in the form of government securities.
• "Senior secured bond": A secured bond that has a first-priority claim on the specified collateral.
  • The senior secured bond holders were paid in full before other creditors.

Noun

1. a bond that is back by collateral