Bearer bond refers to corporate or governmental debt in bond form that is not registered to any owner. Possession of the bond implies ownership, and interest is obtained by clipping a coupon attached to the bond. The advantage of the bearer form are its easy transfer at the time of a sale, its easy use as collateral for a debt, and what some cynics call “taxpayer anonymity,” meaning that governments find it hard to trace interest payments in order to collect income taxes. Bearer bonds are common in Europe, but are seldom issued any more in the United States. The alternate form to bearer bond is a registered bond.
Definition