Bonds

Types of Bond Issuers

Central Governments Sovereign Debt (Sov Debt) means any debt government has guaranteed. This not only include the debts/obligations/securities but also obligations by any of its department/ministries. Nearly all governments require a constant flow of borrowed funds in order to pursue their policies. Even in developed economies, successive budget deficits build up a large stock of outstanding debt that must be refinanced or serviced. Although some countries reduce borrowing during periods of budget surpluses, they never Read more…

Bonds

Dirty Price of a Bond

Dirty Price is the price of the bond, plus part of coupon the seller expects in form of accrued interest for holding the bond for certain days. In most of the European markets, bond prices are quoted in dirty price, and this is what a buyer has to pay to procure a bond. Dirty price is calculated on the basis of settlement date of purchase (T+2, T+3 etc). $latex {Dirty Price = Clean Price + Accrued Read more…

Bonds

Clean Price Of A Bond

Clean price: To avoid the impact of the next coupon payment on the price of a bond, this cash flow is excluded from the price of the bond and is called the accrued interest. Coupons are just the compensation for keeping them Clean prices are affected by interest rates and credit ratings or companies Bonds are quoted as either a percentage of their par value, or face value, or in dollar terms. For example, if Read more…

Bonds

Bond Markets

Even though Bond Market is a common jargon, in reality there is no singular place or exchange where bonds are traded. In-fact, the bond market is a huge OTC ( Over the Counter ) market,  consisting of independent dealers, organised by types of securities. Buyers of bonds are primarily large institutions. This market can also be referred as a wholesale market with almost unreal amount of transactions taking place. U.S. government bonds are traded in block of Read more…