I am not a financial guru but I was always under the impression bondholders made a return based on the risk of their investment, much like stockholders. The assets of a company, including sales history and estimates of future sales, serve to indicate the potential risk to payback to the bond purchaser but are not themselves used as collateral for bonds. How can they be, they're owned by the stockholders? The bonds might not be repaid. That's the risk you took on the chance of some return. This is why I can take part in a bond sale by Kodak without owning any shares of Kodak stock. And vice versa.
Originally Posted by zsas
Of course a company's Board can write whatever agreement they want but doesn't doing so imply Kodak was selling risk-free investment? I'm probably completely wrong; that's why I let others manage my vast empire of holdings.