DEFINITION of 'Public Income Notes - PINES'

An unsecured, unsubordinated debenture issued by a public company. PINES are a type of exchange traded note that trade on a stock exchange but also bear interest. PINES are also a type of preferred security and fall into the same category as quarterly income preferred securities (QUIPS), monthly income preferred securities (MIPS), trust certificates and trust preferred securities. Two examples of companies that issue PINES are GMAC Mortgage and General Electric Capital; the notes trade on the New York Stock Exchange under the ticker symbols GMA and GEA, respectively.

BREAKING DOWN 'Public Income Notes - PINES'

Because PINES are unsubordinated (also called senior debt), they have precedence over other loans or securities in the event that the issuing company should default. This means that an investor holding PINES faces less default risk than with subordinated debt (also called junior debt) because holders of unsubordinated debt are at the front of the line to be repaid. However, because PINES are unsecured, they are not backed by any of the firm's assets, which makes them riskier for investors than secured investments. PINES also have advantages to their issuers, including the tax deductibility of interest payments.



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