What Are Bonds & Bond Trading?

The bond market—often called the debt market, fixed-income market, or credit market—is the collective name given to all trades and issues of debt securities. The bond market broadly describes a marketplace where investors buy debt securities that are brought to the market by either governmental entities or corporations. National governments generally use the proceeds from bonds to finance infrastructural improvements and pay down debts. Companies issue bonds to raise the capital needed to maintain operations, grow their product lines, or open new locations. Bonds tend to be stable, lower-risk investments that provide the opportunity both for interest income and price appreciation.

Bonds are either issued on the primary market, which rolls out new debt, or traded on the secondary market, in which investors may purchase existing debt via brokers or other third parties. There are different types of bonds available for trading named as corporate bonds, Government bonds, municipal bonds, mortgage backed bonds, emerging market bonds and bond indices.