Bond markets

One of the most popular ways of investing money is to invest in securities with a fixed income - bonds. Basically bond is a debt security, which allows lending money to the issuer with the specified interest rate, and not to be dependent on the success of the business activities of the issuer.  

Bond - Emission debt security, enshrining the right of its holder to receive from the issuer of bonds in that it provided for the term of its nominal value or other property equivalent. Bonds may also include the right of its holder to receive fixed in its percentage of the nominal value of the bond or other proprietary rights. Income on bonds is interest and / or discount.  

Despite the fact that the bond market is an OTC market where transactions are carried out directly between counterparties, the amount of information available about the issuers is sufficient to make the optimal investment decision. In addition to return on risk ratio there are rating agencies which provide the “quality” rating for the bond issuers - their ability to pay the debt, quality of management, political risks and so on. As the result of evaluation, agencies assign ratings on the ratings scale. The best known rating agencies and the scale of their ratings:  

  • Fitch Ratings; 
  • Moody’s; 
  • Standard & Poor's. 

A wide range of available bond placements allows choosing the best possible solution for your needs, depending on the level of return that you expect to achieve by investing in bonds. In order to save capital, many investors choose German Bunds or T-Bills, which are guaranteed by the Government of Germany and nominated in euro. US-Treasury Bills are US government bonds nominated in dollars. Yield of these bonds is low; however, reliability of the issuer is very high. Among moderate risk bonds, you can find Euro zone countries debt. For higher risk, emerging markets or corporate bonds are preferred.