Is government bond an asset
Bonds - basic knowledge
What are government bonds?
Countries like Germany, France or the USA also need capital to finance their budgets or other projects. So, like companies, they use the capital market and, in principle, borrow money by issuing government bonds. Through the purchase, the buyer of these bonds becomes just as much a creditor as is the case with corporate bonds, the state debtor who guarantees the interest and repayment. The creditor's claim against the debtor is documented in a document, the bond.
A distinction must be made between the bonds of the Federal Republic of Germany and the bonds of foreign countries in euros or other currencies.
The federal government and its special funds are considered to be public authorities in Germany. These include the federal railway assets and the load equalization fund. The federal states and municipalities are also considered to be public authorities. In order to finance its budget loans, the federal government currently uses a range of six types of securities: Federal bonds, Federal bonds, Federal Treasury Notes, Federal Treasury Bills, Federal funding treasures and Treasury discount bills. With the exception of a floating rate bond, the Foundation bond, the Federal Treasury Bills Type B and the discount papers (Funding treasures, Treasury discount bills) the federal securities have a fixed interest rate and an annual interest payment.
The federal securities, the bonds of the special funds and the fixed-income papers of the federal states and municipalities are usually admitted to official trading on every German stock exchange without an issue prospectus. Since the beginning of the 3rd stage of the European Monetary Union, federal bonds, federal bonds, federal treasury notes and interest-free treasury notes have been quoted in euros.
Like the Federal Republic of Germany, foreign countries also use the issue of bonds to finance their budgets. The value of government bonds is influenced by the country's credit rating. The creditworthiness of the countries is monitored by rating agencies such as Moody's or Standard & Poor's.
Countries not only issue their bonds in domestic currencies such as the euro, but also in foreign currencies such as the dollar, the Swiss franc or the British pound. If the investor also buys government bonds in a foreign currency, he must also consider the currency risks in addition to the return and the risk of default.
To search for federal bonds
To the euro government bond search
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