Secured Corporate Bonds and Unsecured Corporate Bonds

In addition to being categorized as either investment grade corporate bonds or high yield corporate bonds, corporate bonds are also defined as either “secured” corporate bonds or “unsecured” corporate bonds.

What are Secured corporate bonds?

Secured bonds are backed by a direct pledge to specified assets of the issuer such as equipment, plant facilities or land. Secured bonds include mortgage bonds, collateral trust bonds and equipment trust certificates.

What are Unsecured corporate bonds?

Unsecured bonds are not secured by a direct pledge of assets. Instead, they are backed primarily by the good faith and general creditworthiness of the issuing corporation, reflecting its ability to make interest and principal payments. Unsecured bonds include notes, debentures and subordinated debentures.