Charges

These arise when a bond is issued with security over certain assets. If the borrower defaults on the bond, the charged assets can be sold and the proceeds used to repay the debt to the lender. A fixed charge is a mortgage over a specific asset, usually land and buildings, and is also known as a mortgage. A floating charge is a charge over a class of assets, which change from time to time (e.g., cash accounts, inventory, or receivables) but which become fixed charges after a default. Bonds issued with a fixed charge are often known as debenture stock.