Secured Bond

Filed Under »
Dictionary Says

Definition of 'Secured Bond'

A type of bond that is secured by the issuer's pledge of a specific asset, which is a form of collateral on the loan. In the event of a default, the bond issuer passes title of the asset or the money that has been set aside onto the bondholders. Secured bonds can also be secured with a revenue stream that comes from the project that the bond issue was used to finance.

Investopedia Says

Investopedia explains 'Secured Bond'

Because of the pledge of an asset, secured bonds are seen as less risky than unsecured bonds, and they generally provide lower returns than unsecured bonds. Securing a bond with the pledge of an asset is also a way for the bond issuer to lower its interest payments. This means that secured bonds provide investors with a lower return than unsecured bonds because even in the event of default, investors will be compensated at least somewhat for their investment. Some types of secured bonds are mortgage bonds and equipment trust certificates.  

Related Definitions

  • Bond

    A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used ...
    Read More »
  • Secured Debt

    Debt backed or secured by collateral to reduce the risk associated with lending. An example would be a mortgage, your house is considered collateral towards the debt. If you default on ...
    Read More »
  • Secured Note

    A bilateral lending agreement, the note represents a contractual obligation to lend and borrow money at a specified interest rate.
    Read More »
    • Asset-Based Lending

      A business loan secured by collateral (assets). The loan, or line of credit, is secured by inventory, accounts receivable and/or other balance-sheet assets.Also known as "commercial ...
      Read More »
    • Junk Bond

      A bond rated 'BB' or lower because of its high default risk. Also known as a "high-yield bond" or "speculative bond".
      Read More »
    • Equipment Trust Certificate

      A debt instrument that allows a company to take possession of an asset and pay for it over time. The debt issue is secured by the equipment or physical assets, as the title for the ...
      Read More »
    • Asset-Backed Security - ABS

      A financial security backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities. For investors, asset-backed securities are an ...
      Read More »

Articles Of Interest

Partner Links