guaranteed bond

Guaranteed Bond

A type of bond in which the interest and principal on the bond are guaranteed to be paid by a firm other than the issuer of the bond.

Investopedia Commentary

This guarantee limits the impact on bondholders if the issuer of the bond goes into default.

For example, in Canada, bonds issued by crown corporations are guaranteed by the federal government. If the issuer defaults on the debt obligation, the government is on the hook for the interest and principal payments.

Related Links

Bond Basics Tutorial
Debt Reckoning

See also: Bond, Crown Corporation, Debt, Default, Interest, Issuer, Principal, Secured Debt

guaranteed bond

A bond that is issued by one firm and guaranteed as to interest and principal by one or more other firms. Such bonds, often resulting from joint ventures, are particularly common among railroads that lease tracks to and from each another.