ISSUING BONDS

1.

ISSUING BONDS
PREPARED BY NORMATOVA SABINA

2.

WHAT IS
BOND?

3.

A BOND IS BASICALLY A LOAN WITH THE PARTIES AS
An entity, such as a company, a
municipality, or country that needs
money issues a bond, that entity is
obviously called the Bond Issuer and
the amount of money he receives is
called the Principal. It receives that
money from another entity intuitively
called the Bond Holder (someone
who wants to invest money).

4.

• The bondholder expects not only the return of the principal from the bond
issuer but also additional interest, known as the coupon. Additionally, the
agreement specifies a clear maturity date, which marks the end of the deal
between the two parties. Unlike personal loans to friends, however, bonds
are financial instruments that can be bought and sold on the open market.

5.

6.

MAIN TYPES OF BONDS
1. Corporate
Bonds: Issued by
companies to
raise capital,
these bonds
often offer higher
yields but carry
higher risks than
government
bonds.
3. Municipal
Bonds: Issued by
state or local
governments to
fund public
projects. They
often provide tax
benefits.
2. Government
Bonds: Issued by
national
governments,
they are
considered lowrisk and include
Treasury bonds,
notes, and bills in
the U.S.
5. Zero-Coupon
Bonds: Sold at a
discount and do
not pay periodic
interest, but yield
the full face value
at maturity.
4. Savings Bonds:
Low-risk bonds
issued by
governments,
typically for
individual
investors.
7. High-Yield
Bonds (Junk
Bonds): Offer
higher interest
rates due to a
higher risk of
default
6. Convertible
Bonds: Allow
bondholders to
convert their
bonds into a
predetermined
number of shares
of the issuing
company.

7.

WHAT ARE THE
ADVANTAGES AND
DISADVANTAGES
OF BONDS?

8.

CONCLUSION
Issuing bonds is a way for companies and governments to borrow
money. By selling bonds, they get the funds they need for projects
like building roads or expanding businesses. In return, they
promise to pay back the money with interest over time. Bonds help
investors make money by providing a reliable source of income.
Overall, bonds are an important part of the financial world, making
it easier for large projects to get funded and for people to invest.