bondholder

play
noun bond·hold·er \ ˈbänd-ˌhōl-dər \
Updated on: 26 Jul 2017

Definition of bondholder

:one that holds a government or corporation bond

Recent Examples of bondholder from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'bondholder.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of bondholder

1823


Financial Definition of BONDHOLDER

bondholder

What It Is

A bondholder is a person who owns a bond issued by a borrower, typically a company or a government.

How It Works

A bond represents a loan agreement between an issuer and an investor, and the terms of the bond obligate the issuer to repay the borrowed amount (the principal) by a specific date. The investor (the bondholder) usually earns a specific amount of interest on a semiannual basis.

Bondholders can buy and sell their bonds on the bond market.

Why It Matters

Being a bondholder is much different that being a shareholder. For one thing, bondholders are lenders; shareholders are owners. Also, bondholders cannot vote and they are not entitled to dividends. But perhaps most important is the fact that bondholders rank senior to shareholders. This means that the bondholders are among the first in line to be repaid in the event the issuer liquidates. Shareholders might receive some proceeds from the liquidation after this point, if there is anything left. This seniority provides an extra level of security for bondholders, and this is one reason corporate bonds are generally considered "safer" investments than stock.


Law Dictionary

bondholder

play
noun bond·hold·er \ ˈbänd-ˌhōl-dər \

legal Definition of bondholder

:a person or business entity that holds a government or corporation bond — compare stockholder


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