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Industry Group
Corporations are often grouped by the industry to which they belong. A few industry groups are Financial Services, Industrials and Transportation.
Insured Bonds
Some municipal bonds are insured as to principal and interest by large bond insurance firms. The insurance firms are generally large with considerable financial strength. Therefore, any bond that is insured by one of the major insurers will carry a top credit rating from the major rating services, regardless of the issuer's credit strength.
Interest
Interest is the money the issuer pays to the bondholder at specified times throughout the life of the bond. The stated interest rate of a bond is usually referred to as the coupon rate. Most bonds pay interest semi-annually (twice per year).
Interest Payment Dates
Most bonds pay interest twice per year. The interest payment dates are usually the same month and day as the maturity date of the bond, and the six month anniversary. For example, a bond with a stated interest rate (coupon) of 5.0% and a maturity of 02/15/2005 will pay $25 every February 15 (the same month and day as the maturity date) and $25 every August 15 (the 6 month anniversary). Note that each payment is half of the stated interest rate of 5% ($50) per year per $1,000 bond.
Investment Grade
The two major credit rating services rate bonds as to their credit worthiness. Bonds that are rated at or above "Baa" by Moody's, or "BBB" by S&P are said to be investment grade bonds. Bonds rated lower than these ratings are said to be high yield (junk) bonds.
Issue Description
This is the name of the issuer of the bond, and sometimes a brief description of the purpose of the bond. Think of this as the bond's name.
Issuer
The issuer is the entity that issues a bond. It could be the name of a company in the case of a corporate bond, or the name of the state, city, or county in the case of a municipal bond. The U.S. government is the issuer of Treasury bonds.
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Junk Bonds
The two major credit rating services rate bonds as to their credit worthiness. Bonds that are rated at or above "Baa" by Moody, or "BBB" by S&P are said to be investment grade bonds. Bonds rated lower than these ratings are said to be high yield (junk) bonds.
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Listed
Most corporate bonds trade over-the-counter - that is to say that they do not trade on an exchange. There are a small number of bonds that do trade on the NYSE, and these bonds are said to be "listed" on the exchange.
Long Bond
The U.S. government currently issues new Treasury notes and bonds with maturities in 2, 3, 5, 10, and 30 years. The 30 year bond is called the long bond, and it is considered one of the benchmark indicators of interest rates.
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Maturity Date
The maturity date of a bond is the date on which the bond will be repaid. Note that many bonds have features such as puts and calls which may cause the principal to be repaid on an earlier date.
Minimum
See quantity.
Moody's Investors Service
One of the major bond credit rating services.
Municipal Bonds
Municipal bonds are issued by state, county, or city governments. They are generally exempt from federal tax, and are generally state tax-free for residents of the state in which they are issued. (This is not true for all states. Please see the discussion on states below for more information.)
It should also be noted that though interest is tax-exempt, any capital gains are taxed at the appropriate levels.
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Non-Callable Bond
If a bond can be called (redeemed) prior to maturity, the bond is said to be callable. If a bond can not be called prior to maturity, it is said to be non-callable.
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