How does bond market work?

The bond market, or the fixed income market, is where institutions such as the government, corporates, public sector undertakings, etc. raise debt capital. This capital is borrowed for a predetermined period/tenure, during which the investor earns interest. Both principal and interest are repaid periodically which can be monthly/ quarterly/ annually or at maturity. Corporate institutions raise debt capital (NCDs) typically to fund company’s working capital, increase distribution or to fund acquisition initiatives. Governments raise debt capital (Gsecs/SDLs) to fund country’s infrastructure or servicing projects. Irrespective of type, all bonds offer predictable returns.