Bond Basics: Know Your Bond Issuer

Learning bond basics is essential if you are planning on getting involved in the bond market. Whenever you plan on purchasing a bond, you need to make sure that you know your bond issuer well.

Bond Issuer

Whenever you purchase a bond, it is critical that you understand who the bond issuer is and what their track record is. Whenever you purchase a bond, you are essentially loaning someone money. If you purchase a corporate bond, you are giving part of your money to a corporation and allowing them to use it as they want. You are going to be depending on the issuer of the bond to make regular interest payments to you. Therefore, you want to make sure that you choose a bond that is backed by a solid issuer.

Bond Ratings

Whenever you decide to purchase a bond, you need to check out the bond ratings. Bond ratings are provided by financial services such as MorningStar. These bond ratings start out at AAA, which is the best rating that a bond can have. Depending on the scale, they will go down to D or C. A higher bond rating means that the company has a solid credit score and good business history.

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