What is a bond?

Bonds are one of the classic instruments used by a company to raise outside capital. They securitize a repayment claim and interest payments in a certain amount as a payment for the transfer of the capital. While an investor becomes (co-)owner of the company through the purchase of shares, the holders of bonds are creditors. In contrast to loans, bonds are issued publicly so that anyone can lend capital to the issuer of the bond for the duration of its term. They differ in terms and conditions, such as different maturities, the currencies in which they are acquired and repaid, and the type of interest to be paid by the debtor.

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