Collateral Trust Bond

Collateral Trust Bond | Definition

A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security. A collateral trust bond is thus backed by other securities, which may be controlled by the issuer and deposited with a trustee. In the last analysis, collateral trust bonds are as secure as the creditworthiness of the issuer and the real market value of the deposited securities.

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