face-amount certificate company

Face-Amount Certificate Company

A type of investment firm that issues debt securities to its investors. These securities are called face-amount certificates and are backed by security interest on assets such as real property or other securities. This is similar in nature to mortgage bond debt financing.

Investopedia Commentary

This technique allows a company to obtain financing at relatively low interest rates, since its debt is backed by specific tangible assets under the company's control. Investors who hold face-amount certificates are usually paid a fixed amount of annual interest and are refunded the principal (or face amount) of their securities at a specified termination date.

Related Links

When Companies Borrow Money
Bond Basics Tutorial

See also: Debt Financing, Face Value, Financing, Interest Rate, Principal, Secured Bond, Secured Debt, Tangible Asset

Also spelled: Face Amount Certificate Company, Face-Amount Certificate, Face Amount Certificate