A secured bond is a type of bond that is backed by some form of collateral, such as real estate or physical assets. This means that in the event that the issuer of the bond defaults on their payment obligations, the bondholder has the right to take possession of the collateral to recoup their investment.
Secured bonds are considered lower risk investments compared to unsecured bonds because they have the added protection of collateral. This lower risk profile typically results in lower interest rates for secured bonds compared to unsecured bonds.
Secured bonds are commonly issued by companies looking to raise capital for specific projects or investments, often in industries with volatile cash flows or uncertain prospects. These bonds provide investors with a level of security in the form of collateral that can help protect their investment in case of default.
Overall, secured bonds can be a good option for investors looking for a more stable and lower risk fixed-income investment option.
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