Basic definition of bonds
Securities issued in accordance with legal procedures and agreed to repay the principal and interest within a certain period of time. Bonds are creditor's rights and debt certificates issued to investors by national or regional governments, financial institutions, enterprises and other institutions when they directly borrow money from the society to raise funds, and promise to pay interest at a specific interest rate and repay the principal according to the agreed conditions. For more meanings, please refer to the electronic spot room. Therefore, bonds contain the following four meanings:
1. Issuers of bonds (government, financial institutions, enterprises and other institutions) are borrowers of funds;
2. Investors who buy bonds are lenders of funds;
3. The issuer (borrower) needs to repay the principal and interest within a certain period of time;
4. Bonds are the proof of debts and have legal effect. There is a creditor-debtor relationship between the bond purchaser and the issuer, the issuer is the debtor and the investor (or bondholder) is the creditor.
The outstanding RMB bonds in China totaled 23 trillion yuan, accounting for 50% of the gross domestic product (GDP) 2011. This data is generally true, and there is no doubt that both national debt and corporate debt are actually covered by financial institutions at all levels in China.
However, it is incorrect to draw the conclusion that the key risk of government debt problem lies in bonds. It is an indisputable fact that governments at all levels in China have great influence on the economy. The prevalence of various national bonds and corporate bonds is also one of the concrete manifestations of government intervention in the economy. In view of the fact that local governments in China have no other direct ways to issue bonds except provincial local bonds issued by the Ministry of Finance, various government financing platforms, especially the city investment bonds of city investment companies, and corporate bonds actually controlled by the government have become one of the ways for local governments to issue bonds, and the funds raised are basically used for various government investment projects.
Basic elements of bonds
Although there are many kinds of bonds, they all contain some basic elements in content. These elements refer to the basic contents that must be stated in the bonds issued, and are the main agreements that clarify the rights and obligations of creditors and debtors, including:
1. parity
The face value of bonds refers to the face value of bonds, which is the principal amount that the issuer should repay to the bondholders after the maturity of bonds, and is also the calculation basis for enterprises to pay interest to bondholders on schedule. The face value of bonds is not necessarily the same as the actual issue price of bonds. If the issue price is greater than the face value, it is called premium issue; if it is less than the face value, it is called at discount.
2. Repayment period
Bond repayment period refers to the time limit for repaying the principal of the bond stipulated by the corporate bond, that is, the time interval between the bond issuance date and the maturity date. The company should determine the repayment period of corporate bonds in combination with its own capital turnover and various factors affecting the external capital market.
3. Interest payment period
Bond interest payment period refers to the time when an enterprise pays interest after issuing bonds. It can be paid at one time, or 1 year, half a year or three months. Considering the time value of money and inflation, the interest payment period has a great influence on the actual income of bond investors. The interest of a bond that pays interest once at maturity is usually calculated at simple interest; For bonds that pay interest in installments during the year, interest shall be calculated according to compound interest.
4. coupon rate
The coupon rate of bonds refers to the ratio of bond interest to the face value of bonds, which is the calculation standard of the remuneration that the issuer promises to pay to bondholders in a certain period of time. The determination of bond coupon rate is mainly influenced by the bank interest rate, the issuer's credit status, the repayment period and interest calculation method, and the capital supply and demand in the capital market at that time.
5. Name of issuer
The name of the issuer indicates the debt subject of the bond, which provides the basis for the creditor to recover the principal and interest at maturity.
The above elements are the basic elements of the face value of bonds, but not all of them are printed on the face value when they are issued. For example, in many cases, bond issuers announce the term and interest rate of bonds to the public in the form of announcements or regulations.
The main characteristics of bonds
As the evidence of creditor's rights and debts, bonds, like other securities, are also a kind of virtual capital, not real capital. It is a certificate of real capital actually used in economic operation.
As an important means of financing and financial instruments, bonds have the following characteristics:
repayment
Bonds generally have a repayment period, and the issuer must repay the principal and interest according to the agreed conditions.
Transferability
Bonds can generally be freely transferred in the circulation market.
safe
Compared with stocks, bonds usually set a fixed interest rate. There is no direct connection with enterprise performance, so the income is relatively stable and the risk is small. In addition, when an enterprise goes bankrupt, bondholders have priority over stock holders in claiming the remaining assets of the enterprise.
profitability
The profitability of bonds is mainly manifested in two aspects: first, investing in bonds can bring interest income to investors regularly or irregularly; The other is that investors can use the changes in bond prices to buy and sell bonds to earn the difference.
Bond trading mode
The trading methods of listed bonds generally include spot trading, repurchase trading and futures trading.
spot transactions
Cash spot trading, also known as cash spot trading, is a trading method in which both buyers and sellers are satisfied with the buying and selling price of bonds and deliver them immediately after the transaction, or in a very short time.
For example, investors can buy and sell listed bonds directly through securities accounts at various securities outlets of Shenzhen Stock Exchange.
buy-back deal
It means that when the bondholder, issuer and purchaser reach a deal, it is agreed that the issuer must buy back the bonds originally sold from the purchaser at an agreed price at an agreed time in the future, and pay interest at an agreed interest rate (price).
Both Shenzhen Stock Exchange and Shanghai Stock Exchange have bond repurchase transactions, and both institutional legal persons and individual investors can participate.
forward business
Bond futures trading refers to a group of transactions that are delivered and settled at the price stipulated in the futures contract at a specific time in the future after the two parties complete the transaction. Bond futures trading.