Bonds and Bond Markets

This reference will provide you with detailed information on the different bonds and bond issuers. Pay close attention to those issued by corporations. When and why would a corporation issue bonds with covenants?

Introduction

Learning Objectives

  1. Identify bond features that can determine risk and return.
  2. Differentiate the roles of various U.S. government bonds.
  3. List the types and features of state and municipal bonds.
  4. Compare and contrast features of the corporate bond markets, the markets for corporate stock, and the markets for government bonds.
  5. Explain the role of rating agencies and the process of bond rating.

Bonds are a relatively old form of financing. Formalized debt arrangements long preceded corporate structure and the idea of equity (stock) as we know it. Venice issued the first known government bonds of the modern era in 1157 while private bonds are cited in British records going back to the thirteenth century. Venice issued bonds to raise funds to finance a Crusade against Constantinople, which included expansion of a shipyard attached to the Venetian Arsenal.


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