Corporate bonds that are backed by an asset of the company are known as secured.
Many companies issue these that are either in a difficult credit situation where a rating would be low if they issued straight debentures or they have large inventories of assets that can be used to back a secured bond.
Secured corporate investments tend to have a higher rating and lower yield than similar debenture issues because of the asset protection of them.
Types of issues:
Collateral Trust Certificate - These bonds are backed by a company's collateral such as other investments they hold for themsleves (stocks and bonds) or cash.
Equipment Trust Certificate - These secured debt securites are backed by a company's equipment such as airlines, railroads and other large entities that have expensive equipment that can be used.
Mortgage Bonds - These are backed by real estate holdings of a company's portfolio and assets.
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