Bearer, Registered and Book-Entry Bonds Explained

Bonds can be issued in different forms, and each one affects how ownership is proved and transferred. A bearer bond has no named owner. Whoever holds the physical certificate can claim its value, which makes it easy to transfer but vulnerable to loss, theft and misuse. These bonds were also historically used to hide assets from tax authorities. A registered bond records the owner’s details with the issuer or transfer agent. Interest and repayment are sent to the registered holder, and ownership must be formally transferred when the bond is sold. A book-entry bond has no paper certificate; ownership exists only in electronic records, reducing the cost and risk of handling physical documents.

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