Definition of Bonds
Bonds are fixed income securities issued in exchange for a loan, generally by governments and corporations. A bond will generate a fixed interest rate on top of the principal across a fixed time period.
A bond market is a place where bonds are issued, bought, and sold. Bonds are issued in exchange for a loan generally by governments and corporations.
The quality of a bond can be understood by its credit rating, which is nothing but the creditworthiness of the company issuing it. The best bonds in India are known to have the following credit rating:
- SOV: Only for government bonds
- AAA: Highest
- AA+: High-medium
- A+: Upper-medium
- BBB+: Lower-medium
- BB+: Speculative
- B+: Highlight speculative
- CCC+: Risky
- CC: Extremely risky
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