Note: The picture comes from investment science (Boddy et al.).
Note: The picture comes from investment science (Boddy et al.).
1.6. 1 by issuer.
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1 government bonds
Government bonds bonds issued by the central government, government agencies and local governments are guaranteed by the government's reputation, so there is usually no need for collateral, and its risk is the smallest among various investment tools.
(1) Central government bonds: bonds issued by the Ministry of Finance of the central government with the national fiscal revenue as the guarantee. Generally, there is no risk of default, and you can enjoy tax incentives.
(2) Government agency bonds: In the United States, Japan and other countries, besides the Ministry of Finance, other government agencies can also issue bonds. The payment of these bonds is not included in the government budget and is the responsibility of the issuer. These government-related institutions or subsidized enterprises have certain social functions. They increase credit funds by issuing bonds to reduce financing costs. Their bonds are ultimately supported by the central government, so they have a high reputation.
(3) Local government bonds: In most countries, local governments can issue bonds, which are also guaranteed by the government. Their credit risk is second only to national debt and government agency bonds, and they also have tax immunity.
2. Corporate bonds
Corporate bond A bond issued by a company to raise working capital. This bond requires that the fixed income should be repaid first regardless of the company's performance, otherwise it will be resolved under the ruling of the corresponding bankruptcy law, so its risk is less than that of stocks but higher than that of government bonds.
3. Financial bonds
Financial bonds bonds issued by financial institutions to raise credit funds. Since most financial institutions are joint-stock companies, financial bonds can be included in the scope of corporate bonds.
On the surface, issuing financial bonds by banks is the same as taking deposits. However, because bonds have a clear term and cannot be cashed in advance, the funds raised are much more stable than deposits. Financial institutions can actively choose the right time to issue the necessary amount of bonds to attract low-interest funds according to the needs of operation and management, so issuing financial bonds is usually regarded as an important means of asset-liability management. Moreover, because the credit reliability of financial institutions is higher than that of ordinary companies, the credit risk of financial bonds is also lower than that of corporate bonds.
1.6.2 by repayment period
1.6.3 classified by interest payment method
1.6.4 is classified according to whether interest rate is set.
1.6.5 by guarantee or not
1. Credit bonds
Credit bonds are bonds issued entirely based on the company's reputation and do not provide any collateral.
The creditor's right ranking of the holder is lower than that of the secured creditor, and the holder enjoys the general creditor's right to the assets of the unsecured company, that is, the ranking is the same as that of other creditors. The company issuing such bonds must have a good reputation. Generally speaking, only large companies can issue short-term bonds.
2. Mortgage bonds
Mortgage bonds are corporate bonds issued with real estate as collateral, also known as fixed mortgage corporate bonds. If the company fails to repay the principal and interest on schedule, the creditor has the right to dispose of the collateral to repay the debt.
When issuing bonds with the same real estate as collateral for many times, they should be divided into first-class mortgage bonds and second-class mortgage bonds in the order of issuance. The former has priority lien on the collateral and priority compensation; The latter has only a second lien, and can only repay the principal and interest with the remaining collateral after the former is paid off.
3. Guarantee trust bonds
Guaranteed trust bonds are bonds issued with the company's specific movable property or securities as collateral, also known as mobile mortgage company bonds. Securities used as collateral must be kept by the trustee, but the company still reserves the right to vote on shares and accept dividends.
4. Device trust certificate
Bonds issued by equipment trust companies use equipment as collateral to raise funds to purchase equipment.
After the issuing company purchases the equipment, it transfers the ownership of the equipment to the trustee, and then the trustee acts as the lessor to lease the equipment to the issuing company. As the lessee, the issuing company pays the rent in installments, and the trustee keeps it and pays the principal and interest for it. The ownership of the equipment will not be transferred to the issuing company until the principal and interest of the bond are fully paid off. This kind of bonding is often used in railway, aviation or other transportation departments.
1.6.6 press the connotation option
1. callable bonds
The bonds of redeemable bond companies are restricted by early redemption and new repayment terms, allowing the issuing company to choose to buy back all or part of the bonds before the maturity date.
When the market interest rate falls below the bond interest rate, it is unfavorable for bondholders to redeem bonds or replace them with newly issued low-interest bonds, so it is usually stipulated that bonds are not allowed to be redeemed for at least 5 years after issuance.
2. Repayment of fund bonds
Repayment of fund bonds requires the issuing company to deposit a certain percentage of profits into the trust fund every year and repay the principal regularly, that is, buy back a certain amount of bonds from bondholders. This kind of bond is contrary to the callable bond, and its option is on the bondholder's side.
3. Convertible bonds
Convertible Bond A company's bonds are attached with a convertible clause, which gives bondholders the option to convert them into common stock of the company at a predetermined ratio (conversion ratio).
Most convertible bonds are unsecured low-grade bonds issued by high-risk small companies. The ability of such companies to raise debt capital is low, and the use of convertible bonds will enhance the appeal to investors on the one hand; On the other hand, convertible bonds can be redeemed in advance by the issuing company.
4. Bonds with warrants
Bonds with warrants issue warrants as part of a company's bond contract. Like convertible bonds, warrants allow bondholders to buy the issuer's common stock, but for companies, warrants cannot be redeemed.
Conditions for China enterprises to issue bonds (China: Regulations on the Administration of Corporate Bonds);
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& ltFont face= "italics" size=4>。 Bond Credit Rating Credit rating agencies rate the credit quality of publicly issued corporate bonds according to their repayment ability for investors' reference. & lt/font & gt；
2.5. 1 Role of bond rating
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Note: The picture comes from investment science (Boddy et al.).
Basis of bond rating
& ltFont face= "italics" size=4>。 An issuance contract is a legal document that stipulates the rights and interests of both the bondholder and the issuing company, and the trustee (usually a bank) supervises the performance of each clause in the contract on behalf of the bondholder's interests. & lt/font & gt；
Various restrictive clauses in the bond issuance contract account for a lot of space. For a limited liability company, once it defaults due to insolvency, the interests of creditors will be harmed. These restrictive clauses are used to protect the interests of creditors and are generally divided into negative clauses and positive clauses.
Negative clause refers to the provision that shareholders are not allowed or restricted to do certain things. The most common restrictive clauses are those related to debt repayment, such as interest and repayment of funds. As long as the company fails to pay the interest or repay the funds on time, the bondholders have the right to demand the company to repay all debts immediately.
Typical restrictive clauses may restrict additional debts, dividends, working capital level and financial ratio, mortgage of fixed assets, sale or purchase of fixed assets, lease, salary and investment direction to varying degrees. These restrictions actually set some upper limits for the company.
Some bonds also include a "cross-default" clause, which stipulates that for a company with multiple debts, as long as one of them defaults, it is considered that the company has defaulted on all debts.
Affirmative clause refers to the stipulation that the company should perform certain responsibilities, such as requiring working capital and equity capital to reach a certain level or above. These affirmative terms can be understood as some minimum requirements set for the company.
Due to many conditions and restrictions on the listing of bonds, many corporate bonds cannot be traded on the stock exchange. In order to realize their liquidity and meet the requirements of buyers and sellers, the OTC market has been formed. In many countries, most corporate bonds are traded over the counter.
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& ltFont face= "italics" size=4>。 Bond Repurchase When the bondholder (the repurchase party) sells the bonds to the bondbuyer (the reverse repurchase party), both parties agree that the repurchase party will repurchase the same amount of bonds from the reverse repurchase party at the agreed price at a certain date in the future, which is equivalent to borrowing money. & lt/font & gt；
& ltFont face= "italics" size=4>。 Bond reverse repurchase fund holders temporarily give up the right to use the corresponding funds, so as to obtain the bond mortgage of the financing party, return the bonds mortgaged by the other party when the repurchase expires, recover the financing funds and obtain certain interest, which is equivalent to loans. & lt/font & gt；
& ltFont face= "italics" size=4>。 In the pledged repo transaction, the buyer and the seller reach a fund lending agreement according to the agreed interest rate and time limit, and the fund lender provides a certain amount of bonds as pledge to obtain funds, and pays the principal and corresponding interest to the fund lender at maturity. During the repurchase period, neither party can use the bonds as collateral. Also known as closed repo. & lt/font & gt；
& ltFont face= "italics" size=4>。 Buyout repo bondholders sell bonds and reach an agreement with the buyer that the seller will repurchase bonds from the buyer at an agreed price at a future date. During the repurchase period, the mortgage bond belongs to the securities lender, and the securities lender can use the bond as long as a sufficient number of similar bonds are returned to the financing party at maturity. Buy-out repurchase is also called open repurchase.
4.2. 1 national debt
4.2.2 Local debt
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4.2.2 Central Bank bills
& ltFont face= "italics" size=4>。 Central bank bills Short-term debt certificates issued by the central bank to commercial banks to regulate their excess reserves are essentially central bank bonds. The reason why it is called "central bank bill" is to highlight its short-term characteristics (from the perspective of issued central bank bills, the shortest term is 3 months and the longest is only 3 years). & lt/font & gt；
4.2.3 Financial bonds
4.2.4 Corporate bonds and corporate bonds
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4.5. 1 variety mode
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4.5. 1 market participants
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Regulator: The People's Bank of China is the regulator of the inter-bank bond market, responsible for formulating the development plan and management regulations of the inter-bank market, supervising and managing the market, and standardizing and promoting market innovation.
Trading Front Desk: As a market intermediary, National Interbank Funding Center provides three platforms of trading, information and supervision and their corresponding services.
Backstage of settlement: China Government Securities Depository and Clearing Co., Ltd. is one of the backstages of the inter-bank bond market, responsible for bond custody and settlement. Market members must open a custody account with the company in advance to handle bond settlement. Another service of China Bond is to provide market institutions with variety valuation and bond yield curves of various interbank markets.
Clearing background: Inter-bank Market Clearing House Co., Ltd. (referred to as "Shanghai Clearing House") was established in 2009. After September 20 1 1, the settlement business of short-term financing bonds was transferred from China Bond to Shanghai Clearing House. The settlement of other inter-bank varieties is still completed through China Bond. In the future, the settlement business of innovative varieties such as medium-term notes and interest rate swaps may be transferred to Shanghai Clearing House.
4.5.2 Business types
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4.6. 1 monitoring system
4.6.2 Variety classification
Transaction custody