Does Corporate Bonds pledge any asset as collateral | Vested

Does Corporate Bonds pledge any asset as collateral?

Corporate bonds can sometimes be backed by specific assets, which are pledged as collateral. These are known as secured corporate bonds. When a company issues secured corporate bonds, it pledges certain assets, such as property, machinery, inventory, or other tangible assets, as a form of security or collateral to bondholders. If the company defaults on the bond payments, the bondholders have a claim on the pledged assets.


However, not all corporate bonds are secured by collateral. Some bonds, known as unsecured or debenture bonds, may not have specific assets pledged as collateral. Instead, they rely on the company's overall creditworthiness and the promise of future cash flows for repayment.


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