A deposit bond is a type of securitisation that is backed by deposits. Deposits are funds that are held by a financial institution on behalf of its customers.
Deposit bonds are typically structured as senior tranches, which means that they have the highest priority claim on the cash flows from the underlying deposits. This makes deposit bonds a relatively safe investment, as investors are unlikely to lose money if the underlying deposits default.
Deposit bonds are issued by a variety of financial institutions, including banks, credit unions, and insurance companies. They are typically sold to institutional investors, such as pension funds and insurance companies.
Here are some examples of deposit bonds in securitisation:
- Bank of America issued a deposit bond backed by deposits from its customers.
- Commonwealth Bank of Australia issued a deposit bond backed by deposits from its customers.
- Suncorp issued a deposit bond backed by deposits from its customers.