In finance, a bond is a type of security under which the issuer (debtor) owes the holder (creditor) a debt, and is obliged – depending on the terms – to repay the principal of the bond at the maturity date as well as interest over a specified amount of time. The interest is usually payable at fixed intervals: semiannual, annual, and less often at other periods. Thus, a bond is a form of loan or IOU. Bonds provide the borrower with external funds to finance long-term investments or, in the case of government bonds, to finance current expenditure.
A government bond or sovereign bond is a debt obligation issued by a national government to support government spending. It generally includes a commitment to pay periodic interest, called coupon payments, and to repay the face value on the maturity date. For example, a bondholder invests $20,000 into a 10-year government bond with a 10% annual coupon; the government would pay the bondholder 10% of the $20,000 each year. At the maturity date the government would give back the original $20,000.
A Premium Bond is a lottery bond issued by the United Kingdom government since 1956. At present it is issued by the government's National Savings and Investments agency.
A municipal bond, commonly known as a muni, is a bond issued by state or local governments, or entities they create such as authorities and special districts. In the United States, interest income received by holders of municipal bonds is often, but not always, exempt from federal and state income taxation. Typically, only investors in the highest tax brackets benefit from buying tax-exempt municipal bonds instead of taxable bonds. Taxable equivalent yield calculations are required to make fair comparisons between the two categories.
War bonds are debt securities issued by a government to finance military operations and other expenditure in times of war. They are also a means to control inflation by removing money from circulation in a stimulated wartime economy. War bonds are either retail bonds marketed directly to the public or wholesale bonds traded on a stock market. Exhortations to buy war bonds have often been accompanied by appeals to patriotism and conscience. Retail war bonds, like other retail bonds, tend to have a yield which is below that offered by the market and are often made available in a wide range of denominations to make them affordable for all citizens.
United States Treasury securities, also called Treasuries or Treasurys, are government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Since 2012, U.S. government debt has been managed by the Bureau of the Fiscal Service, succeeding the Bureau of the Public Debt.
Daily inflation-indexed bonds are bonds where the principal is indexed to inflation or deflation on a daily basis. They are thus designed to hedge the inflation risk of a bond. The first known inflation-indexed bond was issued by the Massachusetts Bay Company in 1780. The market has grown dramatically since the British government began issuing inflation-linked Gilts in 1981. As of 2019, government-issued inflation-linked bonds comprise over $3.1 trillion of the international debt market. The inflation-linked market primarily consists of sovereign bonds, with privately issued inflation-linked bonds constituting a small portion of the market.
The bond market is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market.This is usually in the form of bonds, but it may include notes, bills, and so on for public and private expenditures. The bond market has largely been dominated by the United States, which accounts for about 39% of the market. As of 2021, the size of the bond market is estimated to be at $119 trillion worldwide and $46 trillion for the US market, according to Securities Industry and Financial Markets Association (SIFMA).
The Canada Savings Bond was an investment instrument offered by the Government of Canada from 1945 to 2017, sold between early October and December 1 of every year. It was issued by the Bank of Canada and was intended to offer a competitive interest rate, and had a guaranteed minimum interest rate.
War savings stamps were issued by the United States Treasury Department to help fund participation in World War I and World War II. Although these stamps were distinct from the postal savings stamps issued by the United States Post Office Department, the Post Office nevertheless played a major role in promoting and distributing war savings stamps. In contrast to Liberty Bonds, which were purchased primarily by financial institutions, war savings stamps were principally aimed at common citizens. During World War I, 25-cent Thrift stamps were offered to allow individuals to accumulate enough over time to purchase the standard 5-dollar War Savings Certificate stamp. When the Treasury began issuing war savings stamps during World War II, the lowest denomination was a 10-cent stamp, enabling ordinary citizens to purchase them. In many cases, collections of war savings stamps could be redeemed for Treasury Certificates or War Bonds.
National Savings and Investments (NS&I), formerly called the Post Office Savings Bank and National Savings, is a state-owned savings bank in the United Kingdom. It is both a non-ministerial government department and an executive agency of HM Treasury. The aim of NS&I has been to attract funds from individual savers in the UK for the purpose of funding the government's deficit. NS&I attracts savers through offering savings products with tax-free elements on some products, and a 100% guarantee from HM Treasury on all deposits. As of 2017, approximately 9% of the government's debt is met by funds raised through NS&I, around half of which is from the Premium Bond offering.
"Any Bonds Today?" is a song written by Irving Berlin, featured in a 1942 animated propaganda film starring Bugs Bunny. Both were used to sell war bonds during World War II.
TreasuryDirect is a website run by the Bureau of the Fiscal Service under the United States Department of the Treasury that allows US individual investors to purchase treasury securities, such as savings bonds, directly from the US government. It enables people to manage their investments online, including connecting their TreasuryDirect account to a bank account for deposits and withdrawals.
Series E United States Savings Bonds were government bonds marketed by the United States Department of the Treasury as war bonds during World War II from 1941 to 1945. After the war, they continued to be offered as retail investments until 1980, when they were replaced by other savings bonds.
Lottery bonds are a type of government bond in which some randomly selected bonds within the issue are redeemed at a higher value than the face value of the bond. Lottery bonds have been issued by public authorities in Belgium, Ireland, Pakistan, Sweden, New Zealand, the UK and other nations.
The FTSE World Government Bond Index (WGBI) is a market capitalization weighted bond index consisting of the government bond markets of the multiple countries. Country eligibility is determined based upon market capitalization and investability criteria. The index includes all fixed-rate bonds with a remaining maturity of one year or longer and with amounts outstanding of at least the equivalent of US$25 million. Government securities typically exclude floating or variable rate bonds, US/Canadian savings bonds and private placements. It is not possible to invest directly in such an index.
United States savings bonds are debt securities issued by the United States Department of the Treasury to help pay for the U.S. government's borrowing needs. U.S. savings bonds are considered one of the safest investments because they are backed by the full faith and credit of the United States government. The savings bonds are nonmarketable treasury securities issued to the public, which means they cannot be traded on secondary markets or otherwise transferable. They are redeemable only by the original purchaser, a recipient or a beneficiary in case of the original holder's death.
Build America Bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder. Build America Bonds were created under Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act that U.S. President Barack Obama signed into law on February 17, 2009. The program expired December 31, 2010.
The American Schools at War program was a program during World War II run by the U.S. Treasury Department, in which schoolchildren set goals to sell stamps and bonds to help the war effort. The program was also administered by the U.S. Office of Education, the Federal government agency that interfaced with the nation's school systems and its thirty-two million students. The Office, however, allowed the Treasury to work with the schools directly as the main objective of the program was raising money.
