In order to manage risk, where a company offers security, the bond will be secured by a legal charge on the assets of the business or the directors. This means if the borrower defaults on the bond, the security trustee can take control of these assets. Bondholders rank ahead of any other existing or indeed future loans into the business. This means that investors in the Bond will have priority over any other creditors and the shareholders of the Borrower. Nevertheless, your capital is still at risk and returns are not guaranteed.
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