Reviewed by Sep 30, 2020| Updated on
An obligor is defined as individuals or entities contractually or legally bound to offer payments to other individuals or entities.
In financial terms, obligor refers to a bond issuer who is contractually bound to make repayments of principal and interest on the outstanding debt. Apart from the requirement to make payments of principal and interest, they may also be needed to meet other conditions.
Obligors may be needed to sign legal agreements to uphold their willingness to repay.
Obligors are mostly bound by the court orders as a part of the case resolution.
People who have debt are the most common types of obligors.
In the case of a bondholder, obligors are called covenants, and the terms are outlined in the initial bond issued between the obligor and obligee.