What are the different types of corporate bonds?

24th Feb 2011 by admint

There are different types of corporate bonds namely, Mortgage bonds, debentures, convertible bonds and commercial paper.
Mortgage bonds are secured by physical assets of the company or corporation such as the building assets and equipments. A mortgage bond provides the bondholders with a 1st lien on corporate property. The lien is given the legal right to sell the property in case of default of payment of loan.
A debenture is a type of corporate bond which are secured only by the creditworthiness of the corporation issuing the bond. This is usually the type of bond where most corporate bonds are categorized. This does not have pledged collateral but the holders of debentures do have a claim over all of the property of the issuer as a general creditor.
Convertible Bond allows bondholders to change their bonds into share of stock of the issuing company. It comes with restrictions of the bond holders can convert the bonds into stocks within a certain time frame only for a predetermined amount of shares decided by the company.


This answer is the subjective opinion of the writer and not of FinancialAdvisory.com