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A bond is an interest-bearing security that obligates the issuer to pay the bondholder a specified sum of money, usually at specific intervals (known as a coupon), and to repay the principal amount of the loan at maturity. Zero-coupon bonds pay both the imputed interest and the principal at maturity.
Direct debt obligations issued by the U.S. government, which uses the revenue from the bonds to raise capital and/or make payments on outstanding debt
Debt obligations issued by agencies of the U.S. federal government or by private agencies, called government-sponsored enterprises (GSEs), which are federally chartered, but publicly owned by their stockholders
Debt obligations issued by states, cities, counties, and other public entities that use the loans to fund public projects, such as the construction of schools, hospitals, highways, sewers, and universities
Fully taxable debt obligations issued by corporations that fund capital improvements, expansions, debt refinancing, or acquisitions that require more capital than would ordinarily be available from a single lender
Debt securities rated below investment grade2 based on the issuer's weaker ability to pay interest and capital, resulting in the issuer paying a higher rate to entice investors to take on the added risk
Fidelity offers investors the opportunity to participate in both the new issue and secondary bond markets. Investors pay no commissions or concessions when participating in new issue offerings, but Fidelity charges a concession or commission in the secondary market. (See Fidelity Brokerage Commission & Fee Schedule (PDF) for more information.)
New issues have a significant presence in the bond market as issuers are constantly entering the market to “roll” their existing debt as well as create new debt. Accessibility of new issues varies for individual investors, with the Treasury market most accessible and the corporate market least accessible.
The secondary market is composed of bonds that were issued in the past and may be traded until redeemed by the issuer. Unlike equity markets where the universe of approximately 9,000 securities is available to trade at all times within market hours, the U.S. bond markets actively offer only a relatively small subset (tens of thousands) out of the more than 2 million unique bonds currently in existence. The composition of this offered subset also varies from day to day.
Fidelity makes it easy for you to view and select from our large inventory of new issue and secondary market bonds and CDs to meet your needs.
debt obligations of the U.S. government that are issued at various intervals and with various maturities; revenue from these bonds is used to raise capital and/or refund outstanding debt; since Treasury securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower yields than other securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero-coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasury Auctions
an interest-bearing promise, to pay a specified sum of money (the principal amount) on a specific date; bonds are a form of debt obligation; categories of bonds are: corporate, municipal, treasury, agency/GSE
a government, corporation, municipality, or agency that has issued a security (e.g., a bond) in order to raise capital or to repay other debt; the issuer goes to an underwriter to get their securities sold in the new issue market; for certificates of deposit (CDs), this is the bank that has issued the CD; in the case of fixed income securities, the issuer of the security is the primary determinant of the security's characteristics (e.g., coupon interest rate, maturity, call features, etc.)
the amount paid by a borrower to a creditor, or bondholder, as compensation for the use of borrowed money
occurs when a bond issuer fails to make either an interest payment or principal repayment on its bonds as they come due, or fails to meet some other provision of the bond indenture
the stated value of an investment at maturity; includes bonds, life insurance policies, bank notes, currency, some stocks, and other securities; typically $1,000 for a corporate bond
a program that offers fixed rate senior and subordinated, unsecured obligations from a variety of independent issuers on a weekly basis, with a range of maturities and structures available; maturities range from 9 months to 30 years for both callable and non-callable securities
a type of asset class in which the investments provide a return in two possible forms; coupon paying bonds have fixed periodic payments and a return of principal; zero coupon bonds are sold at a discount, do not pay a coupon, and have a return of principal plus all accumulated interest at maturity
Gain a deeper understanding of fixed income and bonds.
High yield/non-investment grade bonds involve greater price volatility and risk of default than investment grade bonds.
Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Diversification and asset allocation do not ensure a profit or guarantee against loss.