To manage risk, the bond is typically secured by a legal charge against the business and the underlying assets. This means that if the borrower defaults on the bond, Downing LLP, as the security trustee, can take control of these assets. Bondholders usually rank ahead of or equal to any other existing or future loans to the business. This means that investors in the bond are likely to have priority over other creditors and the shareholders of the borrower. Nevertheless, your capital is still at risk, and returns are not guaranteed.
What does secured actually mean?
