What Is A Senior & Secured Rated Bond?
Firstly, a bond is a debt obligation sold to investors. The term ‘senior secured’ means that a bond is both senior and secured in its structure.
Watch out! A bond can also be ‘senior’ but ‘unsecured’, meaning there is no specific collateral guaranteeing the bond.
So, a ‘Senior Secured Bond’ is a debt security, that is technically not a loan; that is both issued by a trust, limited liability company, corporation, or partnership and is secured by a valid first priority perfected security interest on specified collateral.
This means – YOU are the first priority. As it should be.
Let’s break that down a little more…
First priority – YOU.
When you invest in a a bond, you are giving a company your money to borrow for a defined and agreed period of time.
In exchange, the company must pay you interest on specific dates, at a prescribed time and rate, until the bond comes due. When the bond comes due, or matures , you are paid back the face value of the bond.
What does it mean when your bond is secured?
If you’re invested in a company that fails, whether your bond is secured or unsecured will play a pivotal role in whether you ever see your money again. When a company issues a bond, it is either secured or unsecured. Secured bonds alleviate some of this risk, because the bond is backed by a specific asset or revenue stream.
Which security is known as ‘senior security’ ?
Senior debt is a loan that a company must repay first if it gets into some financial trouble. ‘Senior security’ is security that has priority in claims on the assets and income of the issuer than the claims of other (junior) securities issued by same entity. A more familiar example is that mortgage bonds are senior to debentures which are senior to ordinary shares, or common stock.
Senior secured bonds can be an attractive option in the event of a widespread increase in defaults.
Ask about this AIP Recommended Corporate Bond
- 9% per annum, paid quarterly
- US$ denominated
- Fixed return
- Rated A (sf)
The Bond is asset-backed and has security over a designated pool of leases originated and managed by the servicer and lease originator.
The Issuer security is governed by and enforceable under English Law and assets leased by the borrower in the UAE are pledged to the trustee under a secure trust structure governed by UAE Law.
To date, funds from this bond have been allocated to equipment leases across a diverse range of sectors including, luxury vehicles, manufacturing, printing and healthcare.
The first four coupons have been fully paid – demonstrating the cashflow in the Bond.