r chance in business conditions, or assumption of too much financial risk by the issuer. Different types of bonds Along with the many different characteristics of bonds such as, the way the pay their interest, the market they are issued in, the currency they are payable in, protective features and their legal status. Bond issuers may be governments, corporations, special purpose trusts or even non-profit organizations. Usually it is the type of issuer or the particular nature of a bond that sets it apart in its own category.Government BondsSupranational AgenciesA supranational agency is like a World Bank, that leaves assessments or fees against its member governments. The most important factor is the support and taxation power of the underlying national governments that allow these organizations to make payments on their debts.National GovernmentsThe “central or national governments also have the power to print money to pay their debts, as they control the money supply and currency of their countries. This is one reason why investors consider national governments (bonds) of the most industrial countries to be almost “risk free” from a default point.Quasi-Government IssuersMany government related institutions issue bonds, some supported by the revenues of a specific institution and some guaranteed by a government sponsor. For example, in Canada they have a bank that issue bonds that are guaranteed by the Federal government.Corporate BondsThe business prospects of companies are dependent on the economy and the competitive situation of industries. Issuers are grouped by industry, for example real estate, resource and retail bonds. Industries with stable revenues and earnings are called “non-cyclical”, where as those who revenues and earnings rise and fall with the economy and commodity prices are called “cyclical”.Issuers are also grouped by their credit ratings. Companies that have financial ris...
