Guaranteed Security
Categories: Muni Bonds, Banking
When you buy a bond, the idea is that the issuer will pay back the amount of the bond plus interest.
But what happens if the issuer goes bankrupt?
Usually, you get nothin'. But with a guaranteed security, there's a third party that promises to pay up what's owed even if the issuer is suddenly out of commission. These third parties are governments, insurance companies, or parent companies of the issuer.