26 Feb Bond Issues
There are some basic things you need to know about bonds, most people acquire bonds to strengthen their portfolios risk return profiles, adding bonds can create a more balanced portfolio by adding diversification and calming volatility. But the bond market may seem unfamiliar even to the most experienced investors many investors make only passing ventures into bonds because they are confused by the apparent complexity of the market and the terminology.
In reality bonds are very simple debt instruments, some of the characteristics of bonds include their maturity, their coupon rate, their tax status and their call ability. Several types of risks associated with bonds include interest rate risk, credit default risk and prepayment risk. Most bonds carry ratings that describe their investment grade, bond yields measure their returns. Generally a bond is simply a loan taken out by a company instead of going to a bank. The company gets the money from the investor who buys bonds in exchange for capital, the company pays an interest coupon which is general interest rate paid on a bond expressed as a percentage of the face value. The company pays interest at predetermined intervals usually annually, semi-annually and returns the principle on maturity day ending the loan.
There are many types of bonds, but basically described as 1. Short term bonds fall in a category that mature within one to three years. 2. Medium term type of bonds are normally over 10 years long. and 3. Long-term bonds generally mature over longer periods of time. We handle all aspects of issue, analyzing and providing bond structures short term, medium term, and long term. Across the globe we use very large banks and very large organizations to provide these bonds and arrange them for distribution. If you have these instruments, we can take them as collateral or security for a loan and provide the funds against the security of the financial instrument.
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