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A bond is a security representing a debt. Bonds are securities used by governments, non-financial or financial companies to borrow on the financial markets.
For the bond issuer, a bond is a form of borrowing. For the bond investor, it is a form of lending.

Difference between credit and securitized debt

The main characteristics

  • The amount: a standard issue is around €500M
  • The duration 
  • The interest, or coupon, rate
  • The interest payment terms
  • The terms of capital repayment
  • The level of counterparty risk (rating)
  • The price
  • The rate of return

Role of the bank

The role of the bank during a bond issue is to advise the client on the type of issue (duration, fixed or variable rate, type of bond, which currency, etc.); to inform them about the state of the market and the level of investor appetite for their bonds; to advise them whether or not to seek a credit rating for the issue. It is the DCM (Debt Capital Markets) departments of the banks that help clients issue debt securities on the markets.