Companies and governments issue bonds to in funding their day-to-day operations or to finance specific projects. When one buys a bond, he/she is loaning the money for a certain period of time to the issuer. In return, bond holders receive the loan amount plus interest payments.
To invest in the initial offering of a bond, an investor must:
- read the prospectus for all relevant information pertaining to the issue,
- subsequently, the investor should fill in the application form for submission to the one of the bankers to the issue.
For bond trading in secondary market, the usual process of opening an account with the broker and buying/selling through the broker should be pursued.