Bond rating agencies and credit bureaus are similar in that they both do financial research to establish creditworthiness. A bond rating agency, on the other hand, analyzes whether issuers of debt products such as bonds are likely to meet their obligations to pay interest and repay the principal you gave them, rather than appraising an […]

Individuals sometimes forget that when they buy bonds, they are taking on market risk, which includes the danger of losing their money. To put it another way, bonds, like stocks, fall down in value. Bonds, on the other hand, are less negative year-to-date than most equities. In other words, fixed income is doing its job.

Inflation has been rising as a result of fiscal stimulus, which has put a lot of money in people’s pockets, and a strained supply chain that has been unable to keep up with demand. The real yield (inflation-adjusted) can be negative when inflation is strong and bond yields are low. Real yields are currently -4

When interest rates are exceedingly low, a “inverted yield curve” might occur in the bond market. Why are bonds falling in value? Bonds are generally advertised as being less risky than stocks, which they are for the most part, but that doesn’t mean you can’t lose money if you purchase them. When interest rates rise,

When investors look back on how their portfolio did at the end of this unusual year, they’ll be faced with a fundamental question: Why do I own bonds? For example, the Vanguard Total Bond Market ETF (BND) is down about 2% this year. If you assume a 5% increase in inflation in 2021, BND has

Bonds are generally advertised as being less risky than stocks, which they are for the most part, but that doesn’t mean you can’t lose money if you purchase them. When interest rates rise, the issuer experiences a negative credit event, or market liquidity dries up, bond prices fall. Bond gains can also be eroded by

Bond prices fall when interest rates rise, thus the bonds you own lose value. Bond market price volatility is mostly caused by interest rate changes. Another source of risk for bond holders is inflation. Bonds pay out a set sum of money at set times. However, if inflation outpaces this fixed amount of income, the

A government bond, often known as government debt, is a form of debt issued by a government agency or state-owned corporation. In this case, the buyer or investor will become a creditor and will be paid as well as get other benefits. The government or the agency that issued the bond, for example, receives interest

Bonds are a type of debt financing for a reason. An organization that issues bonds is required by law to pay regular interest to investors and to return the entire bond principal amount at a specified time. Why do bonds require debt financing? Corporations issue corporate bonds. In many circumstances, companies issue bonds instead of

Bonds are typically priced at a fixed rate with semi-annual payments, have longer periods than loans, and contain a maturity balloon payment. Bonds are more expensive than bank debt and have less flexibility in terms of prepayment options. A fixed interest rate indicates that no matter how the lending climate changes, the interest expense will