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Economics/Questions about bonds market .....


1-what make price of corporate bonds increase ?  

2- if I had company with 10 millions in revenue , how can I issue bond value 1 million dollars ( in details , please )

The price of bonds increases and decreases with demand.  Investors will decide, based on the price/availability/risk associated with a particular bond what they're willing to pay for it, and if the current holder is willing to sell it for that price, then the price that they agree upon is the new market price for that bond.  It really is as simple as that.  Bond markets, like stock markets/commodities markets/derivatives markets work just like auctions, so it's all determined by supply and demand.

A company can issue as much debt as it wants.  A company with $0.00 in revenues can issue $10 million in bonds.  The reason for that is that bonds are issued in order to raise funds to expand operations.  When a company is first being created, or they want to expand their operations, they can raise funding in 2 ways: sell equity (ownership in the company) or sell debt.  With bonds, which are debt, they have to repay them because they are a type of loan.  So, the company can try to issue as much in bonds as they want, but investors have to believe that the company will be able to repay these loans.  If a company is at higher risk of default, then the company must promise higher interest rates on those loans to attract investors.  Even with the higher interest rates, they may not sell all their bonds, and only raise part of the total they were hoping to raise.

If you actually want to issue bonds, then you need to go talk to an investment banker.  They're the ones that actually evaluate your proposal, underwrite the loans, broker them on the market, etc.

I hope that helps!


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Michael Taillard


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Consulting with major corporations, government agencies, political organizations, small businesses, non-profits, start-ups, and even individual people. Teaching at universities around the world, and developing original coursework. Performing original research and analysis. Writing books and scientific studies.

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