Government Bonds
Government financing instruments.
What are Government Bonds?
They are debt instruments issued by the national, provincial, or municipal government. They come in different currencies, terms and legislations. In addition, they are issued with the promise of future payments, and investors decide how much they are willing to pay, depending on the perceived risk of default.
After their initial issuance, these instruments may continue to be traded on the secondary market until their maturity date. Depending on their term, they are classified as Bonds or Bills.
Bonds
Long-term government debt securities that offer periodic interest payments and principal repayment at maturity
Bills
Short-term government debt securities issued at a discount rather than offering periodic interest payments; the investor receives the full face value at maturity.
Advantages of investing in Bills and Bonds
- Predictable income: These instruments offer periodic interest payments or a single full payment, providing investors with a regular income flow.
- Access to the secondary market: Following their issuance, bonds and bills can be traded on the secondary market, offering liquidity and the ability to sell the investment before its maturity date.
- Variety of maturities and currencies: A wide range of bonds and bills are available with different maturities and in various currencies, allowing for investment diversification
- Transparency: Government-issued bonds and bills are regulated, with public information available regarding their issuance, terms and associated risks.
