• An unsecured bond is corporate debt that does not come with collateral and therefore represents a riskier prospect for the investor.
  • This is different from debentures, unsecured corporate debts, which often have insurance policies to pay out in case of default.
  • Companies sell unsecured bonds through private placements to raise money for purchases, share buybacks and other corporate purposes.
  • Because unsecured debt is unsecured and carries a higher risk, interest rates offered are higher than secured debt secured by collateral.