Bond Market

What is a Bond Market?

Of course! Buyers and sellers of fixed income securities meet in the Bond Market. A Bond, also known as a debt security, is an agreement of repayment between a borrower and lender. Bond markets are considered less risky than stock markets because bonds provide periodic interest and principal payments.

Corporations and governments issue bonds with varying interest rates and maturity periods (spanning over a few days to several years). Since Bonds are not standardized, they are usually traded through brokers who mediate a sale transaction. This mediation leads to lower transparency and higher transaction costs.

Companies prefer to raise capital through bonds and not shares when they wish to prevent dilution of ownership or to leverage low interest rates!