Bonds are a form of debt. The borrower is the issuer of the bond and the lender is the investor who buys the bond.
Fixed Income Fundamentals
Glossary of Main Terminology
There is quite a bit of industry jargon in the world of fixed income investment. We have tried to give simple explanations to the main terms below. We hope you will find this useful.
The principal issuers of bonds are governments, financial institutions and corporations.
Governments issue bonds to cover the shortfall between the amount they raise.
Companies fund themselves with a mixture of bank finance.
Financial institutions issue bonds to finance their business.
This is the entity that issues bonds and can be any legal entity within a group of companies.
This is one hundredth of one percentage point (i.e. 0.01%).
The maturity of a bond is the date of the final payment due from the issuer.
This is the interest rate payable by the borrower on the face value of the bond.
This is the unit of measure, or denomination, of a bond.
Credit risk includes probability of default, market, concentration and correlation risks.