Guaranteed Bond

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Dictionary Says

Definition of 'Guaranteed Bond'

A debt security that offers a secondary guarantee that interest and principal payment will be made by a third party, should the issuer default due to reasons such as insolvency or bankruptcy. A guaranteed bond can be municipal or corporate, backed by a bond insurer, a fund or group entity, or a government authority.
Investopedia Says

Investopedia explains 'Guaranteed Bond'

Bonds have an inherent risk of default that could mean a bondholder never gets the principal back upon maturity and loses out on periodic interest payments. A guaranteed bond removes this risk by creating a back-up payer in the event that the issuer is unable to fulfill its obligation. Because of this lowered risk, guaranteed bonds generally have a lower interest rate than non-guaranteed bonds.

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Related Definitions

  1. Bond

    A debt ...

  2. Debt

    An amount of ...

  3. Default

    1. The failure ...

  4. Interest

    1. The charge ...

  5. Principal

    1. The amount ...

  6. Secured Debt

    Debt backed or ...

  7. Issuer

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  8. Crown Corporation

    Any corporation ...

  9. Guaranteed Investment Fund - GIF

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  10. Agency Bond

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