SIE: Mortgage Bonds

Mortgage Bonds

Mortgage bonds are secured bonds that offer bondholders a first lien on corporate property. Having a lien means that if a corporation defaults on its bond payments, the trustee can sell corporate property to pay the bondholders. Trustees rarely have to seize property, however, since companies have strong incentives to find other means to pay bondholders. Mortgage bonds pay interest semiannually.