The market place where debt securities are purchased and sold is called a bond market. This market is also known as the debt or fixed income market. There are two segments: the primary market, in which securities are sold by the issuers (borrowers) to subscribers (lenders) and the secondary market, in which investors enter into transactions among themselves for the purchase and sale of issued debt securities.
What is traded?
Government securities and corporate bonds are the major debt securities that are traded in the bond market.
Who are the Participants?
Primarily, there are two participants:
Issuers
They are the Borrowers who seek to raise resources to finance development programs (in the case of Government and quasi-government authorities), lending activities (in the case of banks and financial institutions) or capital expenditure programs (in the case of private players);
Purchasers
Foreign Institutional Investors (FII), Non Banking Finance Companies (NBFC), mutual funds, financial institutions, banks, investment institutions, cash rich corporates and high net-worth individuals (HNI) – in the wholesale segment, and, provident funds, pension funds, NBFC, mutual funds, private and religious trusts, charitable organisations, Hindu Undivided Families (HUF), housing finance companies (HFC), corporate treasuries, cooperative banks and individual investors – in the retail bond market.
