Definition

Noun A type of bond issued without any specific collateral or asset pledged as security. It represents a debt obligation where the issuer's promise to repay is based solely on its general creditworthiness and trust, rather than a claim on specific property.

Usage

An unsecured bond is a financial instrument. It is contrasted with a secured bond, which is backed by collateral. * The corporation raised capital by issuing an unsecured bond, relying on its strong credit rating. * Investors demanded a higher interest rate for the unsecured bond due to the greater risk of default.

Advanced Usage

• In finance and investment: The term is used to categorize debt based on its security. Unsecured bonds are also commonly known as debentures.
  • The company's balance sheet showed a mix of secured loans and unsecured bonds.

Variants and Related Words

• Debenture: A direct synonym for an unsecured bond, especially for corporate or government debt.
• Secured bond: The direct antonym; a bond backed by specific collateral.
• Junk bond: A high-yield, high-risk bond, which is often unsecured.
• Credit: While broader, this relates to the trust in an entity's ability to pay future debts, which is the basis for an unsecured bond.

Synonyms

• Debenture
• Note (in some financial contexts, e.g., "unsecured note")

Related Financial Terms

• Credit risk: The risk that the bond issuer will default, which is a primary concern for holders of unsecured bonds.
• Indenture: The legal contract detailing the terms of a bond issue, including whether it is secured or unsecured.
• Senior / Subordinated: Unsecured bonds can be further classified as senior (higher priority in bankruptcy) or subordinated (lower priority).

Noun

1. the ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future