Bond Markets

Already in chapter 1 we gave a prelude of the bond markets and the main functions of the primary and secondary marketssecondary market(s). We also identified the interested parties such as the investors, the issuers and the intermediariesintermediary(ies). In Chapter 2 we briefly mentioned some of the bond types and their main characteristics. However, we still have to understand which the bond markets are and what the products traded there are. Furthermore, the bond markets have evolved through the years and even though traditional fixed income securities have always attracted interest, there have been other products that have come to the forefront. Fixed income products have increased significantly not only as far as the total outstanding face value or market value is concerned but also in terms of the different types of securities as well as the types of markets. They have therefore attracted the attention of the regulators that attempt to set up a more standardized and rigorous framework for the operation of bond markets, similar to that of the stock markets. In this chapter we look at the fixed income markets, with a fresher look, addressing also contemporary trends. We do not ignore though traditional issues, starting from the money market and going to the bond market. We present the different products that are traded in these markets and explain the way they operate. This chapter exposes the reader to the details of the markets at which bonds are traded.