The purpose of this training document is to familiarize new employees with the U.S. Bond Market. Once the training is complete, employees new to our company will have a better understanding of what the US Bond Market is comprised of concerning the key players, types of investments for both individual and institutional investors, how transactions are performed, and whether or not there is any relation between the US Bond Market and the stock markets.
We begin by taking at look at the key players who make the US Bond Market tick. There are three main players which are issuers, underwriters, and finally, purchasers. The issuers are usually governments, banks, or corporations. The issuers are, in the Bond Market, considered to be the sellers. Governments are usually the largest of the issuers, and their bonds help fund the country’s operations, whereas banks issue out all debt in bond markets, and corporate operations are funded by the corporation issuing debt through bonds. So, the issuers have bonds to sell, but need an entity to ensure proper transaction, and that is where the underwriters come into play. (Who are the key players in the bond market?, 2008)
Underwriters are simply the “middle-man”, and are made up of investment banks and other financial institutions. The underwriters are there to assist the issuers with selling their bonds. They ensure that everything is completed and correct, including all legal documentation, before a transaction takes place. Due to the fact that there are usually millions of dollars involved in a single transaction, the role of the underwriters is highly important. Once all the “T’s” are crossed and the “I’s” dotted, the transaction goes into its final phase with ...