What is a bond?

Contributor: London Stock Exchange |

A bond is essentially a loan that you make to a company or government in return for a regular income.  A company may issue a bond if it needs to fund expansion or enter a new market, while a government may need the money to pay for important infrastructure.

Suppose a company issues bonds in units of £10,000 at an interest rate of 6%, promising to pay investors’ money back in six years. If you purchase one of these bonds you will receive £700 each year until the money is repaid.

There is a distinction between ‘wholesale’ bonds, which are tradeable in units of £100,000 or greater, and ‘retail’ bonds, which are tradeable in smaller sizes, often in denominations of £1,000 or less. Most bonds are ‘wholesale’ and not accessible to private investors.

To make the bond market more accessible for ordinary investors, we launched our electronic Order Book for Retail Bonds (ORB) in 2010. The ORB currently makes 180 retail-denominated issues available to investors, from government gilts to supranational and corporate bonds, for as little as £100.

It aims to make the market more efficient and transparent. It does this in three ways: all participants simultaneously access executable prices and have equal opportunity to trade at the best available price; everyone can see the price discovery process through our third-party data feeds; and all private investors are able to see prices on screen and trade in bonds in the same way that they do in shares.

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What are stocks and shares?

Contributor: London Stock Exchange |

When you trade on our markets you invest in specific securities, such as shares. London Stock Exchange offers trading shares in companies, from the very biggest to those showing potential for rapid growth. Shares, which are also known as equities, are the basic unit of investment i

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What should you consider before investing?

Contributor: London Stock Exchange |

Financial markets provide a marketplace for you to buy and sell assets like shares, bonds, currencies, derivatives and even physical products like commodities. London Stock Exchange offers a marketplace for those securities.

 

What is your a

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Why investing matters?

Contributor: London Stock Exchange |

Everyone has financial goals. You may want to fund your retirement, help your children with their education or with important life events, such as buying a home.

Grow your money

Investing in assets such as company shares offers you the potential

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Disclaimer

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Information in this publication is provided ‘as is’ and London Stock Exchange plc (the “Exchange”) does not make any representations and disclaims to the extent permitted by law all express, implied and statutory warranties of any kind in relation to this publication, including warranties as to accuracy, timeliness, completeness, performance or fitness for a particular purpose.

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