Guaranteed Bond

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Dictionary Says

Definition of 'Guaranteed Bond'

A type of bond in which the interest and principal on the bond are guaranteed to be paid by a firm other than the issuer of the bond.
Investopedia Says

Investopedia explains 'Guaranteed Bond'

This guarantee limits the impact on bondholders if the issuer of the bond goes into default.

For example, in Canada, bonds issued by crown corporations are guaranteed by the federal government. If the issuer defaults on the debt obligation, the government is on the hook for the interest and principal payments.

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