guaranteed bond: meaning, definition, pronunciation and examples
C1Formal, Technical
Quick answer
What does “guaranteed bond” mean?
A debt security (bond) whose repayment of principal and interest is assured by a third party, typically a bank or parent company, making it a lower-risk investment.
Audio
Pronunciation
Definition
Meaning and Definition
A debt security (bond) whose repayment of principal and interest is assured by a third party, typically a bank or parent company, making it a lower-risk investment.
A financial instrument representing a loan to a corporation or government, where the default risk is significantly reduced because an entity other than the issuer has promised to cover the obligations if the issuer fails to do so.
Dialectal Variation
British vs American Usage
Differences
No significant lexical difference; spelling follows standard regional conventions (e.g., 'guaranteed' not 'guarantyed'). The financial concept and usage are identical.
Connotations
In both markets, it connotes security and reduced risk. Slightly more common in British English in the context of 'gilts' (government bonds) with government guarantees.
Frequency
Moderately low frequency in general discourse but standard within professional financial contexts in both regions.
Grammar
How to Use “guaranteed bond” in a Sentence
[Entity] issued a guaranteed bond.The bond is guaranteed by [Guarantor].Investors are buying [Type] guaranteed bonds.Vocabulary
Collocations
Examples
Examples of “guaranteed bond” in a Sentence
verb
British English
- The bank agreed to guarantee the bond issue.
- The bond was guaranteed against default.
American English
- The parent company will guarantee the new bonds.
- They guaranteed the bond payments.
adverb
British English
- The loan was guaranteed bond-secure.
- (Rare usage)
American English
- The debt was practically guaranteed bond-safe.
- (Rare usage)
adjective
British English
- It was a guaranteed-bond offering.
- They sought guaranteed-bond investments.
American English
- We only buy guaranteed-bond products.
- A guaranteed-bond market has developed.
Usage
Meaning in Context
Business
The subsidiary raised capital by issuing a guaranteed bond backed by its parent company's strong credit rating.
Academic
The study analysed the risk premium differential between guaranteed bonds and their non-guaranteed counterparts.
Everyday
My pension fund invests in government-guaranteed bonds because they're very safe.
Technical
The credit enhancement provided by the surety bond effectively transforms it into a guaranteed bond, lowering its risk weighting under Basel III.
Vocabulary
Synonyms of “guaranteed bond”
Strong
Neutral
Weak
Vocabulary
Antonyms of “guaranteed bond”
Watch out
Common Mistakes When Using “guaranteed bond”
- Using 'warranty bond' (incorrect; warranty is for products).
- Confusing with 'surety bond' (which is a type of guarantee for performance, not typically a tradeable debt security).
- Omitting the 'd' in 'guaranteed' (common spelling error).
FAQ
Frequently Asked Questions
No, it is lower-risk, not risk-free. The risk depends on the creditworthiness of the guarantor. If both the issuer and guarantor fail, the bond can still default.
Usually a financially stronger entity than the issuer, such as a parent company, a commercial bank, a monoline insurer, or a government agency.
Lower yield. The guarantee reduces risk, so investors accept lower interest payments.
Yes, like most bonds, guaranteed bonds can be bought and sold in the secondary market, where their price will fluctuate based on interest rates and the guarantor's credit status.
A debt security (bond) whose repayment of principal and interest is assured by a third party, typically a bank or parent company, making it a lower-risk investment.
Guaranteed bond is usually formal, technical in register.
Guaranteed bond: in British English it is pronounced /ˌɡær.ənˈtiːd ˈbɒnd/, and in American English it is pronounced /ˌɡer.ənˈtiːd ˈbɑːnd/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “As safe as a guaranteed bond”
- “A gilt-edged guarantee (UK)”
Learning
Memory Aids
Mnemonic
Think: GUARANTEED BOND = a financial BOND with a GUARANTEE slip attached, like a warranty for your money.
Conceptual Metaphor
FINANCIAL SECURITY IS A PHYSICAL SUPPORT (e.g., 'backed by', 'underpinned by', 'secured by').
Practice
Quiz
What is the primary characteristic of a guaranteed bond?