What are Registered Bonds?

//What are Registered Bonds?
What are Registered Bonds? 2017-10-10T02:50:20+00:00

Definition: Registered bonds are bonds that are issued in the owner’s (bond holder’s) name and address. In a sense, these bonds are marked or registered to the bondholder hence the name, registered bonds.

Companies often use bonds to help finance expansions and business growth. Many companies even prefer bond financing compared with stock or equity financing because ownership shares are diluted. Companies can issue bonds in many forms like registered bonds and bearer bonds.

What Does Registered Bond Mean?

Registered bonds are helpful for both the bond issuer and the bondholder. Since the name and address of the bondholder is registered with specific bonds, there is no need to physically print the bonds.

Conversely, if a bond certificate is printed and the bondholder looses it, the bondholder is protected. The bond is registered to his name and can’t be transferred to another person. The bond issuer will still make interest payments even if the bond certificate is missing.

Example

If the bondholders sells or transfers his registered bond to another person, he has to inform the company to update their bond registration records.

Not all bonds are registered bonds. Some bonds are just issued to the public with no personal registration. These bonds are called bearer bonds, unregistered bonds, or coupon bonds and do not protect against loss like registered bonds do. A bearer bond is much like cash. Possession equals ownership. If a bondholder looses a bearer bond, any person who finds the bond can claim it and start receiving interest and principle payments.