Myron Rice......A collateral trust certificate bond

Mr Rice discussion tonight Statement of Account & Collateral Trust Bond plus more

What is a 'Collateral Trust Bond'

A collateral trust bond is a bond that is secured by a financial asset - such as stock or other bonds - that is deposited and held by a trustee for the holders of the bond.

If the issuing company were to default on the debt obligation, the debt holders would receive the securities held in trust, just like collateral for a loan. For example, say Company A issues a collateral trust bond, and as collateral for the bond it includes the right to Company A shares held by a trust company. If Company A were to default on the bond payments, the bondholders would be entitled to the shares held in trust. Furthermore, if the issuer defaults on its payments, the voting rights of the shares held by the trustee will be transferred to the trustee which has the option of selling the securities to pay the bondholders.