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Perpetual knowledge bank series: Bond Issuer

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Bonds are issued as forms of tradable debt with the bond issuer being the borrower and the purchaser or bondholder the lender. Bond issuers are typically any organisation that registers, distributes and sells a bond on the primary market. The bond issuer pays periodic – usually annual or semi-annual − interest to the bondholders, and upon maturity, the issuer returns the principal amount borrowed to the holder of the bond. 

Bond issuers may include companies, governments, supranational entities, municipalities, or Special Purpose Vehicles (SPV). However, corporate bonds issued by public or private companies looking to finance projects or raise working capital are the most common globally. In this example, the bond-issuing company gets the money they need while the bondholder should get a low-risk return on their investment. There are a wide variety of corporate bonds traded on the ASX with terms and credit worthiness that may differ quite markedly. It is therefore important that investors read the issuer’s prospectus and term sheet for each individual bond or seek financial advice before investing. 

The ASX also differentiates between two types of government bonds issued by the Australian Government: Treasury Bonds (or TBs) and Treasury Indexed Bonds (or TIBs). TBs are fixed rate bonds and TIBs are indexed bonds linked to the CPI. Both TBs and TIBs are usually issued in series with each series having its own coupon rate and maturity date, ranging from less than one year to over 25 years. Government issuers are generally considered less risky than corporate issuers. 

This analysis has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.

The information is believed to be accurate at the time of compilation and is provided in good faith. This document may contain information contributed by third parties. PIML and PSL do not warrant the accuracy or completeness of any information contributed by a third party. Any views expressed in this document are opinions of the author at the time of writing and do not constitute a recommendation to act. 

The product disclosure statement(PDS) for the Perpetual Diversified Income Fund issued by PIML, should be considered before deciding whether to acquire or hold units in the fund. The PDS and Target Market Determination can be obtained by calling 1800 022 033 or visiting our website http://www.perpetual.com.au

No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor’s capital. Past performance is not indicative of future performance.