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Straight Bonds
Bonds with a fixed coupon and fixed redemption date. |
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Eurobonds
Bonds issued on the Euromarket which are exempt from withholding
tax. Eurobond trading is centered in London for tax reasons. |
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Domestic Bonds
Bonds issued by domestic borrowers in their own currency on
their home market. |
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Government Bonds
Bonds issued by governments to finance their national budgets.
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Corporate Bonds
A bond issued by a corporation. |
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Emerging Market Bonds
Bonds issued by countries classified as Emerging Markets, usually countries with increased political or economic uncertainty. These bonds offer high potential yields but entail a higher risk of default.
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Top Grade Bonds
Government, Supranational or Corporate Bonds with a credit rating
of AAA or AA, the two highest ratings. |
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Investment Grade Bonds
Corporate bonds that are rated at or above BBB.
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High Yield Bonds
Typically corporate bonds that are rated below investment grade by the major rating services. These bonds' yields are much higher than investment grade bonds, but there is usually a substantial risk of default. |
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Floating Rate Notes
Securities with variable interest rates, typically with a coupon which is reset quarterly or semi-annually. |
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Convertible Bonds
Bonds which feature a conversion right entitling the holder to convert the bond into shares of the company in question at a certain point in time and at a conversion ratio set in advance. Following the conversion, the bond expires.
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Step-up Bond
A bond that pays a coupon rate for an initial period which then steps up in future periods.
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Perpetual Bonds
Bonds with no maturity date. Perpetual bonds make regular interest payments, but never redeem the principal amount; to get back the capital invested, investors must sell the bond.
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Warrant Bonds
Bonds with a warrant attached. The warrant entitles the holder to buy a specific number of shares of the company in question during the exercise period at a price fixed in advance. Once the warrant is exercised, the bond continues to run until its maturity date.
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