What are the security components in terms of bonds?

Modified on Mon, 24 Jun at 12:38 PM

  1. Collateral or Security Interest: Some bonds are secured by specific assets of the issuer, such as real estate, equipment, or inventory. This collateral provides a source of repayment for bondholders if the issuer defaults.

  2. Guarantee: Guarantees from a parent company/another entity or a personal guarantee can enhance the creditworthiness of the bond issue. These guarantees promise that the guarantor will fulfill the obligations of the issuer if they are unable to do so.

  3. Term sheet Covenants: Bond agreements may include financial and operational covenants that restrict the issuer's activities to ensure they maintain sufficient financial health to meet their bond obligations. These could include limitations on debt levels, dividend payments, or capital expenditures.

  4. Senior Repayments: All the bonds available on the platform are senior secured Bonds, which means that the repayment seniority in case of default would be the highest for these bondholders.

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