Fixed-Income Issuance and Trading

How bond markets are carved up by issuer type, credit quality and maturity, which issuers borrow and which investors lend in each segment, how fixed-income indexes differ from equity indexes, and how new bonds are sold in the primary market and traded afterwards in a mostly over-the-counter secondary market, compared at each step with equities.

1. 1. Market segments and who issuesBond markets are sorted mainly by who issues (sector), how creditworthy they are, and how long the debt runs, and an issuer's credit quality largely decides which of those segments it can reach.Free13 min
2. 2. Who invests, and whereInvestors position themselves along the credit and maturity spectrums to match their future obligations and the risks they want to earn a return for.11 min
3. 3. Fixed-income indexesBond indexes do the same jobs as equity indexes, but they hold far more securities, turn over much faster and are weighted by the market value of debt, so they are usually tracked by sampling rather than full replication.13 min
4. 4. Primary markets: how bonds are issuedIn the primary market an issuer sells new bonds to raise money, and the process ranges from a weeks-long debut with roadshows to a few-hour shelf issue by a frequent investment-grade borrower.14 min
5. 5. Secondary markets, liquidity and distressed debtMost bonds trade over the counter through dealers, liquidity varies enormously from bond to bond, and the bid-offer spread is the yardstick: tiny for new government bonds, wide for old or infrequent corporate issues.13 min