Bond Basics: 5 features of bonds

Understand issue date, issue size, maturity value, coupon, and yield maturity before investing on bonds.

13:41 03 February 2013

This article is for those people who are very new to bonds. In here, we’ll talk about the basics - issue date, issue size, maturity value, coupon, and yield maturity. 

Issue size – this refers to the number of bonds issued by the government or the private corporation. This is multiplied by the face value to reflect the exact monetary needs of the entity issuing the bonds. 

 

For example, if an entity issues three million bonds with £50 face price, the issue size is £150million. 

 

Issue date –as the name implies, it’s the date when the bonds are issued. This is the date when the bond begins to accrue interest. 

 

Maturity date–this is the date when the investor will have the capital repaid. Investors have the option to buy and sell a bond before the maturity date in the open market. 

 

Coupon –This is the periodic interest payment issued by the issuing entity during the life of the bond. For example, if a bond with a £20,000 maturity value offers a coupon of 5per cent, investors typically receive £500 every year. 

 

Yield to maturity –this is the rate of return on a
which is held until the maturity the date.