The Bond Market is the financial market where debt securities or bonds are traded. Bonds are usually issued by the companies in need of finances. Those buying these bonds become the creditors of the company which is then bound to repay the original sum of money lent along with due interests.
In Bond Market parlance, the Bond Market may also be called as the Debt Market, or Credit Market. Commonly, any discussion about the Bond Market concerns the Government Bond Market, mainly because the individual lenders do not want to subject their hard earned money to possible losses by taking credit risks. Which implies that individual lenders, who form the greatest section of the participants in the Bond Market, are not in favor of lending their hard earned money to companies which are likely to turn hostile or become bankrupt. As a result of which, the individual lenders are likely to suffer financial losses in stead of gaining profits for their investments.
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- Bond Yield
Bond Yield is meant as the rate of interest that is paid by the company issuing bonds to the owner of any particular bond.
- Bond Rate
Bond rate is the rate paid by the company to the investor. The rate on the bond is always inversely proportional to the prices of bonds.
- Bond Investing
Bond investing is an option of investment over the world. Investing on bonds may be short term in nature or long term in nature. Find more information on bond investing.
- Bond Prices
- Bond Insurance
- Stock and Bonds
- Bond Issue
- Bond Rating
However, the Government and the different Federal Agencies are the organizations that are least likely to either turn hostile and not repay the sum of money lent by the bond holders or become bankrupt amounting to total losses incurred by the buyers of Bonds. This is the main reason behind the popularity of the Government and Federal Agencies in the Bond Market.
The Bond Market can be classified into two different units as per the procedure of its operations.
Primary Bond Market – where the companies in need of finances issue debt securities to lenders in the form of Bonds. As a result of buying the bonds issued by the companies operating in the Bond Market, the companies issuing bonds become the debtors of the bond holders and are thereby compelled to repay the sum lent, along with due interests at the completion of the term of the particular bond.
Secondary Bond Market – is the financial market where the bond holders trade the outstanding bonds (bonds issued previously in the Bond Market) amongst themselves.