Investing in bonds made simple

The world's largest market is now available for everyone.

Manage your own bonds portfolio with CFDBonds.com

About CFDBonds

CFDbonds.com aims to enable and simplify trading fixed income for all retail investors around the globe. Our trading platform allows you to build your own bonds portfolio based on your investing criteria. Our great value allows our clients to generate income in a zero interest rate environment.

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Markets

Choose your own yield of return - Variety of major government & corporate bonds are now available.

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Advantages

Contract for difference (CFD) on bonds allow you to enjoy all of the advantages. Simplicity, Tax free & Leverage.

Market

Transparency

View online executable prices & yields.

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Our platform

Intuitive and easy to use trading & reporting system.

Trading platform

Enjoy full control of your investments

  • Intuitive 1 click order submission
  • Range of corporate & government bond issuers
  • Full bond description and prospectus
  • Exotic bonds FX monitor
  • Live prices
  • Daily charts
  • Professional reporting system

Education

Learn About Bond Investing

Before tackling the complexities of this huge and diverse bond market, it is important to understand the basics: What is a bond and how can bonds help meet your investment goals? Explore our educational resources to help you become a more confident investor.

In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. It is a debt security, under which the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly). Very often the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the second market.

Thus, a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or short term commercial paper are considered to be money market instruments and not bonds: the main difference is in the length of the term of the instrument.

Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in the company (i.e., they are investors), whereas bondholders have a creditor stake in the company (i.e., they are lenders). Being a creditor, bondholders have priority over stockholders. This means they will be repaid in advance of stockholders, but will rank behind secured creditors in the event of bankruptcy. Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks are typically outstanding indefinitely. An exception is an irredeemable bond, such as a consol, which is a perpetuity, that is, a bond with no maturity.

Principal
Nominal, principal, par, or face amount is the amount on which the issuer pays interest, and which, most commonly, has to be repaid at the end of the term. Some structured bonds can have a redemption amount which is different from the face amount and can be linked to performance of particular assets.

Maturity
The issuer has to repay the nominal amount on the maturity date. As long as all due payments have been made, the issuer has no further obligations to the bond holders after the maturity date. The length of time until the maturity date is often referred to as the term or tenor or maturity of a bond. The maturity can be any length of time, although debt securities with a term of less than one year are generally designated money market instruments rather than bonds. Most bonds have a term of up to 30 years. Some bonds have been issued with terms of 50 years or more, and historically there have been some issues with no maturity date (irredeemable). In the market for United States Treasury securities, there are three categories of bond maturities:

Short term (bills):
Maturities between one to five year; (instruments with maturities less than one year are called Money Market Instruments)

Medium term (notes):
Maturities between six to twelve years;

Long term (bonds):
Maturities greater than twelve years.

Coupon
The coupon is the interest rate that the issuer pays to the holder. Usually this rate is fixed throughout the life of the bond. It can also vary with a money market index, such as LIBOR, or it can be even more exotic. The name "coupon" arose because in the past, paper bond certificates were issued which had coupons attached to them, one for each interest payment. On the due dates the bondholder would hand in the coupon to a bank in exchange for the interest payment. Interest can be paid at different frequencies: generally semi-annual, i.e. every 6 months, or annual.

Yield
The yield is the rate of return received from investing in the bond. It usually refers either to the current yield, or running yield, which is simply the annual interest payment divided by the current market price of the bond (often the clean price), or to the yield to maturity or redemption yield, which is a more useful measure of the return of the bond, taking into account the current market price, and the amount and timing of all remaining coupon payments and of the repayment due on maturity. It is equivalent to the internal rate of return of a bond.

Credit quality
The quality of the issue refers to the probability that the bondholders will receive the amounts promised at the due dates. This will depend on a wide range of factors. High-yield bonds are bonds that are rated below investment grade by the credit rating agencies. As these bonds are riskier than investment grade bonds, investors expect to earn a higher yield. These bonds are also called junk bonds.

Market price
The market price of a tradable bond will be influenced amongst other things by the amounts, currency and timing of the interest payments and capital repayment due, the quality of the bond, and the available redemption yield of other comparable bonds which can be traded in the markets. The price can be quoted as clean or dirty. ("Dirty" includes the present value of all future cash flows including accrued interest. "Dirty" is most often used in Europe. "Clean" does not include accrued interest. "Clean" is most often used in the U.S.[7] )

Issue price
The price at which investors buy the bonds when they are first issued will typically be approximately equal to the nominal amount. The net proceeds that the issuer receives are thus the issue price, less issuance fees. The market price of the bond will vary over its life: it may trade at a premium (above par, usually because market interest rates have fallen since issue), or at a discount (price below par, if market rates have risen or there is a high probability of default on the bond).

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