What Is a Mortgage Debenture?

Mortgage bonds refer to when a bond issuer issues part of a bond through legal proper procedures as part of the property of the bond issuer as collateral. Once the bond issuer has difficulty in repaying the debt, the property is sold to pay debt. In this legal relationship, there are two certificates of bonds and trust agreements, which involve the relationship between the bond issuer, the bond holder and the bond trustee. Bond trustees hold collateral or liens on behalf of bondholders. When the bond issuer is unable to pay the principal and interest at maturity, the bond holder exercises the right to dispose of the collateral or lien through its trustee.

Mortgage bond

Mortgage bonds refer to

mortgage

(1) Limit mortgage, also known as "

Companies that issue bonds publicly usually need to be rated by a bond credit agency. The credit rating of a bond has important implications for both the issuing company and the buyer. This is because:

1. Bond rating is an important indicator for measuring the risk of default. The rating of bonds has a direct impact on the interest rate of debt financing and the cost of corporate debt. Generally speaking, bonds with a high credit rating can be issued at a lower interest rate; bonds with a low credit rating have a higher risk and can only be issued at a higher interest rate. In addition, many institutional investors have limited their investment scope to specific grades of bonds.

2. Bond ratings make it easy for investors to make bond investment decisions. For the majority of investors, especially small and medium investors, due to time, knowledge and information constraints, it is impossible to analyze and select many bonds. Therefore, professional institutions need to be objective, fair and reliable in the reliability of bond repayment. Authoritative assessment provides reference for investors' decision-making.

The internationally popular bond grades are grades 3 and 9. Level AAA is the highest level, level AA is the advanced level, level A is the upper level, level BBB is the intermediate level, level BB is the middle level, level B is the speculative level, level CCC is the fully speculative level, level CC is the maximum speculative level, level C Is the lowest level.