A secured corporate bond is debt that is backed by a specific asset of the company. These bonds are normally issued by companies who do not want to back their bond based on their full, faith and credit.
These corporate issues could be secured by equipment, real estate, or other collateral - such as stock and bond holdings.
If the company fails to pay off of the bonds to investors, the assets are liquidated and the investors can claim those proceeds.
These investments can be callable or non callable and are rated based on credit quality. Secured bonds will normally rate higher than debentures of equal specifics because of the guaranteed liquidation to pay off bondholders.
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