# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Joint Bond

Written By
Paul Tracy
Updated January 16, 2021

What is a Joint Bond?

A joint bond is a bond that is backed by an issuer and one or more additional guarantors.

How Does a Joint Bond Work?

A company that wants to raise capital using bonds may choose to issue joint bonds if it generates low or fluctuating levels of revenue. The company's obligations on joint bonds are backed by at least one other party that pledges to fulfill the obligations if the issuer becomes insolvent.

Joint bonds are also called joint and several bonds, referring to the obligations that the issuer and its guarantors share together and independently. In other words, if a guarantor is called upon to make payments and refuses, that guarantor is also considered to be in default.

Guarantors for joint bonds are typically more solvent companies. For example, suppose Company ABC wishes to issue bonds to finance its expanding operations, but the market has expressed concerns about ABC's long-term ability to meet the obligations.  ABC may approach Company XYZ to be a guarantor on its joint bonds. If Company XYZ agrees, it will be equally responsible for interest and principal payments on Company ABC bonds.

Why Does a Joint Bond Matter?

Joint bonds are advantageous for small subsidiary companies because they can have their parent companies serve as guarantors. Guarantor companies must ensure that they have the resources to make interest and principal payments since an inability to do so would place them in default.

Ask an Expert about Joint Bond
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Joint Bond.
Be the first to ask a question

If you have a question about Joint Bond, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Joint Bond, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Joint Bond

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms