An alternative to the promissory note arrangement is considered in which a 40-year bond is used as collateral for regular ECB loans which replace an equivalent amount the ELA debt.

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The rule that all bond issues must be backed by collateral was lifted in 1979, and other restrictions were also slowly relaxed, but companies still need an investment-grade rating.

ECONOMIST: Japanese finance

Eric and Amanda put up Serenola as collateral to free him on bond, and by late afternoon he was home.

NEWYORKER: Bones of Contention

This week the Bank of England, following the European Central Bank, said it would no longer be guided strictly by a government-bond's rating when deciding whether to accept it as collateral.

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In fact the company was lending the money with no collateral at all, and using the proceeds of new bond offerings to pay interest to existing investors.

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Because the bond program is so much smaller and more obscure, it was relatively easy for it to become collateral damage in the sequester.

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For example, JP Morgan (JPM) or Bank of America (BAC) took in Spanish bonds as collateral that MF Global had just purchased and made a loan that matured concurrently with the bond maturity date.

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Since the bond issuances have been drafted as bankruptcy-remote, investors only have the payouts from tobacco companies as collateral.

FORBES: Bondholders Likely to Suffer From States' Tobacco-Funding Addiction