Issuer
The borrower on the other side of a bond - a sovereign government, a state or municipality, a government agency or a company. The issuer owes the coupons and the par value.
Example
The same company can be the issuer of senior secured, senior unsecured and subordinated bonds at the same time, each with a different position in a wind-up.
Important
You buy an issue, not an issuer. Two bonds from one borrower can recover very differently in a default, so the terms of the specific issue decide what you own.
Related terms
- Bond — A loan made to a government, agency or company, packaged so it can be transferred to somebody else. It obliges the issuer to pay stated interest on stated dates and to repay a stated sum at maturity.
- Seniority — Where a particular claim sits in the queue for payment if the borrower fails. Secured claims are paid from their collateral first, then senior unsecured claims, then subordinated ones, with shareholders last.
- Credit risk — The risk that an issuer fails to make a contracted payment. It is the risk most associated with bonds and, for high-quality issuers, rarely the one that moves the price.
- Covenant — A promise written into a bond contract that limits what the issuer may do while the debt is outstanding - additional borrowing, dividends, asset sales, or a minimum level of interest cover.
Lessons that explain it
All 578 terms in the Investing glossary