Unsecured Loan Stock


Unsecured Loan Stock

A loan made to a company with no collateral. In many respects, unsecured loan stock behaves like a bond (both offer fixed returns, have maturity dates, and so forth). However, unlike a bond, in the event of default or liquidation, the holder of unsecured loan stock does not have a claim on the company's assets. For that reason, unsecured loan stock carries higher risk than a bond. Despite the name, it has nothing to do with shares of stock.