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Investing in bonds is the most reliable investment in the securities bond market. This tool is recommended for those who care about the complete safety of capital with a fixed income slightly higher than that interest rates of a bank deposit. A bond market holder receives a fixed income from his investment in the form of interest payments. Also, in many cases, bond prices below par (at a discount), and they are repaid by the borrower at par bond prices.
The exchange-traded bond market is a regulated financial space fixed income where the purchase, sale, and exchange of bond prices takes place according to the established rules interest rates. Bond market players and legislation regulate these rules. Thanks to the official circulation of securities, it becomes possible to compile statistics. Statistics reflect the effectiveness and quality of treatment of fixed income. Let us consider in more detail the features of the bond market.
Only high-yielding Eurobonds (High Yield) with a rating lower than investment retain the potential to reduce yields, so the demand for a high-yielding bond market in foreign currency breaks records.
Investors are becoming less picky in the face of growing expectations for lower foreign exchange interest rates and a limited volume of good issuers (now Chinese companies dominate the emerging bond market for foreign currency bonds fixed income). Besides, the record share of negatively bond prices Eurobonds in the debt stock market encourages a more active search for securities with adequate positive returns. In this review, we wonder if this portends a correction, and if not, what current ideas to buy can be highlighted.
The bond market is generally considered a safer investment tool than stocks since their owners take precedence in demanding a share of the company’s assets in the event of its liquidation or restructuring. For issuers, the bond market is a reliable alternative to banks and other lenders, who may offer less attractive financial conditions than capital markets: for example, higher interest rates on loans.
As we wrote earlier, it is important to harmonize expectations and investment requirements. Shares have liquidity and potential profitability (or loss) but do not provide security for fixed income assetрs. Government bonds have a declared yield and a high degree of security. However, to be guaranteed to receive the declared yield, treasury bonds must be held until maturity, and they can be illiquid (if liquidity is part of your goal).
Are you interested in a contribution to the bond market with subsequent trading in them? Contact Dowmarkets staff to help you learn how to trade bonds. Participants can resort to the help of consultants and start activities in the stock market. At first, new investors cannot influence the bidding. Over time, with a competent consultant, they can become serious players.