~Bonds~💛

Bonds are the debt security where an issuer is bound to pay a specific rate of interest as per the agreed term of payment and the principal amount to be paid later as maturity of bond. A bond either issued by government or corporation has a specific maturity period which can range upto few days to 10-30 years or even more.The bond period generally would be of 5 to 10 years.The bond holder generally are like a creditor to the companies. Bonds are referred as short and long-term bonds. Bonds have fixed face value, which the amount has to be returned to the investor/creditor upon a maturity of bond. During this period investor/creditor receive a regular payment of interest, semi annually or annually, which is calculated as certain percentage of the face value and it is known as ‹coupon payment›.

THERE ARE SOME TYPES OF BONDS

GOVERNMENT BONDS -  These bonds are issued by government of India or by public sector units (PSU's) in india. These bonds are generally issued with the low rate of interest as compare to other types of bonds. These bonds are secured as they are backed up with security from government of India.

CORPORATE BONDS -   These bonds are issued by the private Corporate companies. Indian corporate issue secured or non secured bonds.The private Corporate has to take care of the credit rating given by the credit rating agencies before investing in these bonds.

TAX SAVING BONDS - In India, the tax saving bonds are issued by the government of India for providing benefits to the investors in form of tax saving. The bond creditors/investors along with getting the normal interest they would also get tax benefits. In India these bonds are listed by National stock exchange and bombay stock exchange. Hence they can easily be liquidated and sold in the open market.

BANKS AND OTHER FINANCIAL INSTITUTIONS  BONDS - They are issued by banks or any financial institutions. The financial market is well requlated and the majority of bond markets are from this segment.

FOREIGN CURRENCY EXCHANGEABLE BONDS (FCEBs) -  These bonds are used to raise funds from international markets against the security and exchangeability of shares of another companies.

It means:-

1) The principal and interest is payable in foreign currency.

2) Bonds are expressed in foreign currency.

3) Issued by an issuing company, being an indian company.

4) exchangeable into equity shares of another company.

5) wholly or partly or on the basis of any quity related warrants attached to debt instruments.

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