第十章 债券基础

Chapter 10 Bond Basics

New Words and Expressions

Background

What is a bond?

A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the lender (creditor), and the coupon is the interest.

What’s the difference between bonds and stocks？

Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in the company (i.e., they are owners), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks may be outstanding indefinitely.

Issuing bonds

Bonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets. The most common process of issuing bonds is through underwriting. In underwriting, one or more securities firms or banks, forming a syndicate, buy an entire issue of bonds from an issuer and re-sell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors.

Syndicate ：A group of banks authorized to be involved as the creditor of part of loan transaction. 辛迪加被授权作为债权人参与部分贷款事务的银行联合组织。

In the case of Government Bonds, these are usually issued by auctions, where both members of the public and banks may bid for bond.

Bond Rating

Bond rating agencies, such as Moody's, Standard and Poor's, provide evaluations of the default risk of many corporate bonds in the form of bond ratings. 债券评级机构，如穆迪、“标准普尔”等，用债券评级的方式给许多公司进行违约风险评估。

Moody's for example, rates bonds on a 9-point scale from Aaa, Aa through C, where Aaa-rated bonds have the lowest expected default risk. 例如，穆迪公司将债券分为9级，从Aaa，Aa 一直到C，其中Aaa级债券的预期违约风险最低。

As we konw the yields on bonds increase as the risk of default increases, reflecting the positive relationship between risk and required return. 随着违约风险的增加，债券收益也增加。这表明风险和要求报酬率是正相关的。

Types of bonds

1、Fixed Rate Bond

A bond where the coupon’s interest rate remains fixed for the entire term. Interest rate movements affect the bond’s price not the coupon.

固定利率债券在整个债券有效期限内，债券的息票利率保持不变的债券。利率的变动影响债券的价格而非息票。

2、Floating Rate Note(FRN)

A bond where the coupon’s interest rate is changed periodically in accordance to a specific market rate.

浮动利率债券（FRN）息票利率根据一定市场利率而发生周期性变化的债券。

3、Zero Coupon Bond

A bond that is issued and sold at a discount, pays no coupons and provides payment of the face value at maturity.

零息债券打折出售的到期不支付利息只支付面值的债券。

4、Junk Bond

A bond that is rated by a ratings agency as being below investment grade and investment in the bond is high risk.

垃圾债券被信用级别评定机构评定为低于投资级别的投资风险高的债券。

5、Investment Grade

Bond rated BBB and above or Baa and above by Standard & Poor’s and Moody’s Investor Service respectively

投资级别分别被标准普尔和穆迪投资者服务公司评定为BBB以上或Baa以上的债券。

6、Municipal bond

Municipal bond is a bond issued by a state, U.S. Territory, city, local government, or their agencies. Interest income received by holders of municipal bonds is often exempt from the federal income tax and from the income tax of the state in which they are issued.

市政债券是美国最受欢迎的避税投资工具之一。这些债券是由州及地方政府或者他们的代理机构发行的，可以免交联邦所得税，而且，如果投资者是居住在债券发行地的话，很可能还可以免交州或者地方所得税。