Legal Definitions - bonded debt

Bonded debt is a type of debt that is secured by a bond. It refers to a business or government debt that is represented by issued bonds. This means that the borrower has issued bonds to investors in exchange for the borrowed money. The borrower is then obligated to pay back the borrowed money plus interest to the bondholders.

For example, a company may issue bonds to raise money for a new project. The investors who buy the bonds become the company's creditors and are entitled to receive interest payments and the return of their principal investment when the bonds mature. The company is obligated to pay back the bondholders according to the terms of the bond agreement.

Another example is when a government issues bonds to finance public projects such as infrastructuredevelopment. The bondholders are entitled to receive interest payments and the return of their principal investment when the bonds mature. The government is obligated to pay back the bondholders according to the terms of the bond agreement.

These examples illustrate how bonded debt works and how it is used by businesses and governments to raise capital.