Bearer-Bond.com

Negative Attributes of Bearer Bonds

Issuer's Loss
Since bearer bonds do not require the issuer's transfer agent to record the bondholder's name, there is always a chance that fraudulent certificates will be presented for interest. Bearer bonds should have a unique appearance in comparison to other types of bonds, but should not show the coupon holder's name.

Bearer bonds are difficult to call. If the issuer would like to pay back its debt early, and refinance at a lower interest rate, it is generally not an easy task to locate bondholders.

Bondholder's Loss
Bearer bonds are difficult to replace. Like cash, if destroyed, lost, or stolen, there is little that can be done to replace certificates. If the certificates are stolen, whoever possesses them can collect the interest from the issuer's paying agent.