Bond is a type of debt securities that essentially represents a loan agreement between the bond issuer (who are corporations, state-owned enterprises, or government) and investors (bond-holders), in which the bond issuer is obligated to pay to investors a specific amount of money called coupon or interest periodically (except for zero-coupon bond for which no coupon is paid) and the principal at the time the bond is matured called maturity date. Companies or other entities may issue bonds directly to investors instead of obtaining loans from a bank when they need to raise money to finance new projects, maintain ongoing operations, or refinance other existing debts.

A key distinction between Stock and Bond is that bond represents creditors while stock represents ownership of the company. The value of a stock can rise rapidly for a growing, profitable company. Bond, on the other hand, only pays a pre-determined interest payment and their prices are bound by interest rates, and not by a company’s profitability.

Corporate bond is the only type currently allowed to be listed on the CSX since the government bonds do not exist yet. It refers to a type of debt securities issued by a public limited company or permitted entity. According to SECC’s Prakas on Public Offering of Debt Securities, a corporate bond may be classified as follows:

1. Plain (Vanilla) Bond refers to bond that has fixed coupon rate and will mature on a date fixed at the time of issue. Such bond does not have enhancement and/or additional call or put option and are not secured or guaranteed.

2. Guaranteed bond refers to bond that guarantee interest and principal payment by a third party in case the issuer defaults for the reason such as insolvency or bankruptcy.

3. Secured Bond refers to bond that are secured with assets except asset-backed securities which are stipulated in other related regulations.