Fixed Income - Terminology

Terminology

Some of the terminology used in connection with these investments is:

• The issuer is the entity (company or government) who borrows the money by issuing the bond, and is due to pay interest and repay capital in due course.
• The principal of a bond – also known as maturity value, face value, par value – is the amount that the issuer borrows which must be repaid to the lender.
• The coupon (of a bond) is the annual interest that the issuer must pay, expressed as a percentage of the principal.
• The maturity is the end of the bond, the date that the issuer must return the principal.
• The issue is another term for the bond itself.
• The indenture, in some cases, is the contract that states all of the terms of the bond.