Market risk (also incorrectly called interest rate risk) is the risk of bond rates rising and the holder making a capital loss. This is the same as the price of bonds falling, because the two…

Counterparty risk is twofold: the risk of tainted scrip entering the market, and settlement risk. The former involves the sale of tainted (fraudulent) certificates by a seller to a buyer. The latter involves the reneging…

Government Debt: As the largest issuer of bonds (in most countries) the central government deserves special mention. Because the central government is the largest issuer by a large margin, the local bond market essentially is…

Special purpose vehicles (SPVs) are also large issuers of bonds in many countries. Generally, the banks create or encourage the creation of SPVs. These vehicles are generally created by banks in order to lighten their…

There are many reasons for borrowing in the bond market, but the fundamental reason is to acquire long term finance or funds, usually for long-term capital projects (such as the building of a factory or…

The long term undertakings of a fixed capital nature of issuers are what give rise to the issue of bonds. Many companies and governments and public enterprises (also called parastatals) have a requirement for long-term…

Trading in bonds (secondary market broking and dealing) is a size able business in most financial markets. As noted earlier the secondary market is either OTC or exchange-driven. The market is “made” / facilitated by…

The money market is usually defined as the market for marketable short-term debt instruments and the bond market as the market for marketable long-term debt instruments. However, as hinted at above, it is our opinion…