Guaranteed Bond

A guaranteed bond is a type of financial security that provides a secondary assurance by a third party, in the event that the issuer defaults due to insolvency or bankruptcy. The third party is the entity that would make interest and principal payments. A guaranteed bond may be corporate or municipal in nature. Guaranteed bonds can be backed by bond insurance companies, fund or group entities, government agencies, or the corporate parents of subsidiaries or joint ventures that are issuing bonds.