Bonds

Abstract

Any discussion of bonds and the bond markets will be lengthy and detailed because the market is large and the variations on the standard bond concept are substantial and growing. In the very simplest form a bond is an interest-bearing debt obligation or corporate IOU. It is a security which represents a company’s promise to repay at some time in the future (and to make periodic interest payments to) an investor who has lent it money. The ‘promise’ also includes details of when and how the investor will be fully repaid. When a company needs to raise funds and elects to do so using debt (as opposed to equity) one of the main vehicles available to fulfil the requirement is a bond.