Bond (Debt Instrument or Fixed Income Securities) is a financial instrument issuers, which is called. The borrower or debtor. A legal obligation to pay compensation in the form of periodic interest and principal or other benefits. In accordance with the instrument to the buyer, which is called. Lenders or creditors. When the agreed deadlines. The period of maturity of the bond will range from short-term (Not to exceed one year), medium term (one to five years) to long term. (Over five years), the debt capital markets are generally defined as securities that are redeemed more than one year or more. The buyer will receive compensation in the form of interest, discounts or other benefits that have been defined.
According to the above definition, the ... "Debt" is a kind of financial instruments to make money (borrowers) and those who have money but want to return (the lender), bound together by the regulations. Specified in the contract bonds (Indenture) is a common rule. The bonds can also be changed in the secondary market is similar to trading shares on the Stock Exchange.
"Debt" is a broad term. It may be more familiar is the "bond" and "bonds" and are often used to call bonds debt securities issued by governments or enterprises. And is often referred to as the debentures issued by private companies. But in other countries use the term "Bond" for debt issued by both public and private sectors. In some cases, a "Debenture" When the debt has no collateral.
1. Valued at par (Par value).
Means the value that the borrower must pay back the bond holders. At the end of the 1,000 or 10,000 Baht
2. Interest rate (Coupon rate).
The interest rate that the Issuer has the obligation to pay the bond holder. The periodic interest payments over the life of the bond.
3. For the payment of interest (Coupon frequency).
Is the number of interest payments per year. Depending on the requirements of the issuer such as a semi-annual interest payments, etc.
4. Expiration date or maturity date (Maturity date).
The expiration date of the bond. The issuer must pay the last installment of principal and interest (if any) to shareholders.
5. The name issue (Issue).
The issuer is located in the status of the borrower or debtor, sure enough.
6. The type of debt instrument.
Is information that identifies the type of unsecured debt such as bonds. Subordinated / not subordinated. Convertible debentures etc.
7. Agreements (Covenants).
Refers to the condition that the issuer will need to follow or refrain from practices such as the life of the bonds do not pay dividends to shareholders than the rate prescribed. The existence of the debt to equity ratio not exceeding the rate specified. Agreements may include limited management of the issuer, such as a ban on such activities.
Debt securities are classified as another channel of investment. Depending on the decision of investors to pay attention to.
This channel much. Based on expected returns and risk levels acceptable.
Part of the reason that most investors choose to invest in debt securities. Can be summarized as follows.
1. An investment with low risk relative to equities because of the probable rate of return. Estimated cash flows, investors can expect to receive in the future.
2. Has been relatively stable and consistent returns. The bond coupon payments are determined in advance.
3. Is a financial one, which reduces the risk of investing in the equity investment can not estimate the income from dividends or share of profits (Capital Gain / Loss) is exact and regular bonds are subject to change. the price (Volatility) is less than equities.
4. We support the secondary market. (Marketability) trading in transferable. And if a good quality instruments such as government or corporate issuers with a strong financial position will allow the bond liquidity (Liquidity).
5. Used as part of the statutory liquid assets for banks or financial institutions.
6. Can be used for other purposes such as The guarantee business. Guarantees the accused. Treasury for use in non-budgetary government agencies such as Article 5 and 6 will be in the specific case of government debt.
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