What is a Secured Bond?
Bonds are a type of investment in which money is lent to a borrower in exchange for a fixed rate of return. Many bonds are unsecured, meaning that there is nothing concrete to back up the bondholder’s investment, just the promise of the bond issuer to pay the bondholder back. A secured bond, on the other hand, is backed by assets, usually physical ones such as real estate, which are liquidated in the event that the bond issuer cannot pay back the borrowed funds. While bonds are generally considered to be a fairly safe investment, there is a degree of risk, as with every investment. Secured bonds aim to reduce that small risk even further, although there is no way to completely eliminate risk. A secured bond is secured by a mortgage or other similar lien. If the bond issuer, whether that be a corporation, local government, or other entity, cannot pay back the bond with interest at the end of the term, the title to the mortgage or other asset is transferred to the bondholder. A secured b
