The different types of bonds Choosing between the different Corporate bonds types of bonds Corporate bonds are issued by companies when they need to raise money to finance their business, or to repay There are many different kinds of bonds in the market, other loans. They are often considered to be higher risk so it’s important to know exactly what you want from than government bonds, because companies generally your investment. In particular, there’s one question you are more likely to have problems paying their debts. need to consider. Are you willing to take on more risk, with the aim of achieving more income, or do you want to keep things as safe as possible? Your answer will help you decide which types of bonds are right for you. The two main issuers of bonds are governments and You can lend money to a companies: country (a government bond) or to a company Government bonds (a corporate bond) Government bonds are issued by countries, normally to raise money for public spending. Among the biggest A higher level of issuers of government bonds are the UK government interest normally means (UK government bonds are also known as gilts), the US a higher level of risk government (their bonds are known as Treasuries) and the German government (bunds). Governments with solid public finances are generally regarded as low risk, as they are less likely to fail to keep up the payments. Therefore, they tend to pay very low coupons, or interest. 8