corporate debt outline

registered bonds

1. the name of the owner is listed on the bond certificate. 
2. send interest payments to registered name on interest date
3. still issued
4. to get principal returned, bond holder mist send certificate to transfer agent at maturity date

book entry bonds

1. no certificate issued
2. trustee and transfer agent track owner of bond, interest payments 
3. investor receives a confirmation and account statement upon purchase-receipt
4. transfer agent maintains records of bondholders, addresses, Social Security numbers

Principal amount of bonds 

1. issued in $1000 amounts
2. trades in $1000 amounts
3. principal, face amount, represents the amount the corporation must pay to the investor when bond matures
4. at face value, at $1000
5. bonds trade at par value because interest rates are constantly changing 
6. interest increases, bond price decreases
7. What is the principal denomination amount of a corporate bond? $1000

Types of corporate bonds

1. secured bonds: backed by a specific property such as land, buildings, or some other type of security that can be used as collateral 
2. mortgage bonds-either closed end, open end, and prior lien
3. closed end mortgage bonds: do not allow any other bonds with the same priority to be issued on the same property
4. open end mortgage bonds: allow more debt to be issued on the same property with an equal lien on the property 
5. prior lien bonds: have a lien-debt that is owed to a creditor that supercedes all other bonds
6. equipment trust certificates: bonds that are backed by rolling stock (movable equipment) such as railroad cars, equipment and airplanes. The railroad or airline company issues the trust certificate using the equipment as collateral
7. guaranteed bonds: issued by one corporation but guaranteed by a second against default of interest and principal by the issuing corporation. If the issuing corporation defaults by not being able to pay back interest on principal the bondholders can rely on the second corporation as backing for the principal
8. debenture bonds: backed by the "full faith and credit" of the issuing corporation 
9. subordinated debenture bonds: unsecured bonds that have no backing except the "full faith and credit" of  the corporation. Have a lower priority of payback than all others
10. income bonds: a.k.a. adjustment bonds, investors agree to change the bonds and receive a form of compensation as opposed to let the company into bankruptcy and receive nothing. Don't make interest payments unless there is sufficient income to the corporation. If the company misses 3 consecutive payments, the corporation may have to liquidate or go into receivership
11. collateral bond: issued by a corporation when it uses the securities of another issuer as collateral to secure a bond. The securities frequently were issued by a strong corporation.