Bond: Difference between revisions

From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson
(Add link to UK Finance webpage.)
imported>Doug Williamson
(Add link.)
Line 54: Line 54:
* [[Coupon bond]]
* [[Coupon bond]]
* [[Covered bond]]
* [[Covered bond]]
* [[Credit support]]
* [[Customs bond]]
* [[Customs bond]]
* [[Depositary]]
* [[Depositary]]

Revision as of 11:50, 4 April 2021

1. Securities - debt.

A marketable longer-term debt instrument usually administered by a trustee.

Bonds typically require the issuer to repay the amount borrowed plus interest over a designated period of time.

The current market yield on the bond is both the market rate of return to the debt investor and the pre-tax market cost to the issuer of debt capital.

Issuers of bonds include a wide range of corporate and public sector entities, including central governments.


2. Trade finance - credit support.

In trade finance, a bond is an instrument issued by a bank or an insurance company, in favour of a buyer, on behalf of a supplier, as additional assurance to the buyer that the supplier will perform its obligations under the supply contract.

Such a bank bond or insurance company bond will be supported by an indemnity issued by the supplier in favour of the bank or insurance company.


Examples include advance payment bonds, bid bonds, customs bonds, performance bonds and retention bonds.

In this context, the terms "bond" and "guarantee" are often used interchangeably.


3. Risk management - guarantee.

A guarantee provided by one party to another.


4. Risk management - collateral.

An amount of money provided as security for a guarantee.


See also


External link