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    Home»Bonds»What are bonds and how do they work?
    Bonds

    What are bonds and how do they work?

    September 13, 2016


    In the first answer I used governments as an example, but it is not all governments nor is it only governments.

    Governments of rich countries issue bonds and so do many emerging economies – Turkey, Mexico, Brazil and others. Even some low-income countries have started to do it, Rwanda for example.

    The bonds are often known informally by other names. In the UK, government bonds are referred to as “gilt-edged securities” or just gilts, in the US they are Treasuries, in Germany they are Bunds and in Japan JGBs (Japanese government bonds).

    Other official agencies also issue bonds, including the World Bank and the European Stability Mechanism (one of the agencies for eurozone bailouts).

    Bonds are also issued by businesses, often to fund investment or takeovers. These are known as corporate bonds.



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