'Unsecured' means just what it says

While I join Catherine Cole (February 14) in congratulating Edward Rizzo for his excellent article titled Investing In Bonds - Some Facts, I am surprised Ms Cole stated that "I was always under the impression that, at the very least, one's capital was 100 per cent safe with bonds".

One appreciates that anyone uninitiated in investment matters is unlikely to comprehend the technical distinction between terms such as "subordinated" and "un-subordinated" bonds.

However, surely the term "unsecured" amply indicates what it means!

There is no need to go back to the times of defaults by even so-called "sovereign risk" states in the early 20th century (e.g. Russia; China) as only a few years ago Maltese investors suffered losses when Argentina failed to honour its bond interest and redemption commitments.

Nearer home, now there is talk that even Ireland could default on its debt commitments.

So investors should be fully aware that "unsecured" means what it says and that even sovereign debt is not 100 per cent safe.