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Glossary

Bond

Category — Bond Types
A bond is an issue-grade debt security that gives its holder the right to receive its par value and a coupon from the issuer in cash or in the form of any other equivalent in property within the period of time stipulated in it.

Securities that give the right to their holders to receive a fixed interest income (coupon) are called interest-bearing (coupon), for example, Austrian Anadi Bank AG, 3.6% 2apr2022, EUR. Coupon yield can be either fixed or floating, depending on various non-financial and financial conditions and indicators, including interbank rates, for example, 12M EURIBOR. Payments under coupon securities are made within a pre-agreed period, and if the payment is made at the end of the security’s circulation simultaneously with the payment of the par value, then these are bonds with interest at maturity, for example, CIBC, 2.55% 21oct2024, CAD. If there is no coupon yield, such securities are called discount securities, for example, Barclays Bank PLC, 0% 27feb2025, GBP (2192D), 01.

Bonds may differ by issuer (state, municipal, corporate), maturity (short-term, medium-term, long-term, indefinite), convertibility, security, type of placement, purpose of issue, etc.

Bonds are attractive from the point of view of investment and have relatively low risks compared to other financial instruments, often due to a pre-set period of circulation on the market and a known interest income. These advantages make it possible to more accurately predict the return on such investments for a certain period, even if it is planned to sell the bonds before maturity.
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