Straight bonds

Bonds with a fixed coupon and fixed redemption date.

Eurobonds

Bonds issued on the Euromarket which are exempt from withholding tax. Eurobond trading is centered in London for tax reasons.

Domestic bonds

Bonds issued by domestic borrowers in their own currency on their home market.

Government bonds

Bonds issued by governments to finance their national budgets.

Corporate bonds

A bond issued by a corporation.

Emerging market bonds

Bonds issued by countries classified as Emerging Markets, usually countries with increased political or economic uncertainty. These bonds offer high potential yields but entail a higher risk of default.

Top Grade bonds

Government, Supranational or Corporates Bonds with a credit rating of AAA or AA, the two highest ratings.

Investment Grade bonds

Corporate bonds that are rated at or above BBB.

High Yield bonds

Typically corporate bonds that are rated below investment grade by the major rating services. These bonds' yields are much higher than investment grade bonds, but there is usually a substantial risk of default.

Junk bonds

A high-risk, non-investment-grade bond with a low credit rating, usually BB or lower; as a consequence, it usually has a high yield.

Floating rate notes

Securities with variable interest rates, typically with a coupon which is reset quarterly or semi-annually.

Convertible bonds

Bonds which feature a conversion right entitling the holder to convert the bond into shares of the company in question at a certain point in time and at a conversion ratio set in advance. Following the conversion, the bond expires.

Step-up bond
A bond that pays a coupon rate for an initial period which then steps up in future periods.

Perpetual bonds

Bonds with no maturity date. Perpetual bonds make regular interest payments, but never redeem the principal amount; to get back the capital invested, investors must sell the bond.

Zero-coupon bonds

Bonds with no maturity date. Perpetual bonds make regular interest payments, but never redeem the principal amount; to get back the capital invested, investors must sell the bond.

Warrant bonds

Bonds with a warrant attached. The warrant entitles the holder to buy a specific number of shares of the company in question during the exercise period at a price fixed in advance. Once the warrant is exercised, the bond continues to run until its maturity date.