Bonds

Parties Involved in a Bond

The bond market can essentially be broken down into three important key players or groups.
  1. Issuer:

    The issuer is responsible for selling bonds in the bond market to fund the operations of the organizations. This part of the market usually comprises of governments, banks and corporations, out of which the major one is the government, which uses the bond market to in funding a country's operations. Other issuers consist of banks and corporate entities which issue bonds to fund their operations.

  2. Trustee:

    A trustee of a trust deed is responsible for securing any issue of a bond. The trustee can be an individual person, member of board, a company or a bank appointed with the approval of the SECP. A trustee in the case of Bonds is basically a holding service who has the power of administration for managing dealings related to bonds.

    They are trusted to make decisions in the beneficiary’s best interest. The primary role of a trustee is to take possession of the trust property in accordance with the provisions of the trust deed and exercise due diligence to ensure compliance by the issuer with the provisions of the trust deed.

  3. Investor

    The final player in the bond market is the one who buys the debt that is being issued in the market.It can be an individual or a group who commits money to investment products with the expectancy of financial return. Commonly, the primary concern of an investor is to reduce risk while maximizing return, as opposed to a risk-taker, who is willing to accept an advanced level of risk in the hopes of collecting higher-than-average profits.