Common Bond

Common Bond

What are Secured and Unsecured bonds?

• Secured bond is a type of bond that seller have to use some assets for guarantee that seller will pay back money. If seller doesn’t pay back money buyer can get the assets.
• Unsecured bond is a type of bond that doesn’t have guarantee but seller use faith and credit to make buyer buy it. Unsecured bond might have risk but it also have a lot return.

What are Term, Serial and Callable bonds?

• Term bonds and Serial bonds are opposite kinds of bond. Term bonds are the bonds issued with the same maturity date and have a call feature called “indenture” which  bonds’ holder can  redeem it at the certain price at the specific time before maturity date. On the other hand, Serial bonds are the bonds that have many maturity dates with different interest rates.
• Callable bonds are the bonds which issuer can return the principal to the investor and stop paying interests before its maturity date. A callable bond pays an investor a higher coupon than a non-callable bond.

What are Convertible, Commodity-backed and Deep-discount bonds?

• Convertible bond is a type of debt security that can be converted into shares of issuer’s company at certain times during the bond's life. This kind of bond can solve a problem receiving a negative image from investor because of overvalued share price by issuing convertible bonds which bondholders are likely to convert to shares anyway then the company continue to do well. Convertible bonds are a useful financing option for both investors and companies
• Commodity-backed bonds have a guarantee by goods eg. oil and coal oil etc. for example A Company produce alcohol and take goods to the warehouse for asset-linked bond. Government need to have a person that take responsibility to goods until A Company settle all debt so, A Company can sell them goods.
• Deep-discount bond will have a market price of 20% or more below the face value. These bonds are always riskier than other bonds. Investors are attracted to these discounted bonds because of their high return or minimal chance of being called before maturity.

What is Registered and Bearer/Coupon Bond?

• Registered Bond is bond has mention by name or bond holder. For example, Mr.A purchase or sells this bond, the person can receive money or get a benefit will be the same list on the stock certificate only. If transfer to another person Mr.A need to do a new stock certificate.
• Bearer/Coupon Bond is bond that on need to mention by name you can transfer to another one by hand-over only. Now in Thailand we have only Registered Bond.

What are Income and Revenue bonds?

• Income bond is a type of bond that buyer will get interest only if seller have income so it has a high risk but it also have high return.
• Revenue bond is a type of bond that make by any government agency. Revenue bond make for specific project, such as highway or bridge, money form buyer will use for that project and buyer will get money back form the project’s revenue with in period of time in contract.