Government bonds are debt securities issued by a government. Exchange-traded Australian Government Bonds ("AGBs") are a convenient and readily accessible way for investors to invest in bonds issued by the Australian Government.
AGBs have one of the lowest credit risks because they are issued by the Australian Government. They may be suitable for investors seeking a stable and secure investment without a high rate of return.
There are two different types of Exchange-traded AGBs:
- Exchange-traded Treasury Bonds (TBs) are medium to long-term debt securities that carry an annual rate of interest fixed over the life of the security, payable six monthly.
- Exchange-traded Treasury Indexed Bonds (TIBs) are medium to long-term debt securities for which the capital value of the security is adjusted for movements in the Consumer Price Index (CPI). Interest is payable quarterly, at a fixed rate, on the adjusted capital value. At maturity, investors receive the adjusted capital value of the security – the value adjusted for movement in the CPI over the life of the bond.
Learn more about Exchange-traded Australian Government Bonds.
- Exchange-traded TB information statement from the Australian Government
- Exchange-traded TIB information statement from the Australian Government
- More about Exchange-traded Treasury Bonds (TBs)
- More about Exchange-traded Treasury Indexed Bonds (TIBs)
- Key risks
- ASX Bond Calculator
- List of Exchange-traded AGBs - including ASX codes, term sheets and charts
- Online course on Exchange-traded AGBs
- Market reports and key information.
Corporate bonds are debt securities issued by a company. They represent a loan by the investor to the issuing company. At maturity of the bond, the company repays the face value (an exception is perpetual securities – see below). Along the way the investor receives interest, which will be either a fixed rate, or a floating rate that moves in line with market interest rates.
No two bonds are identical. You should read the prospectus for particular features that may affect the interest you receive, or the repayment of your investment. Some general categories are:
- Vanilla style: Bonds issued by companies that can be either secured or unsecured. They have a fixed maturity and coupon rate meaning that cash flows are known throughout the life of the bond and the face value is repaid at a fixed date in the future.
- Floating Rate Notes (FRNs): Bonds that can be either secured or unsecured. FRNs pay a variable coupon amount, generally quarterly or semi-annually, which is referenced to a short-term benchmark rate such as the 90-day bank bill swap rate.
- Perpetual Floating Rate Notes: Some FRNs are perpetual and have no specified maturity date. Without a fixed redemption date an investor may have to sell on-market (at a premium or discount to face value) to realise their investment. The issuer may have the right (but not an obligation) to redeem a perpetual; however, there can be no guarantee of this occurring.
Learn about the features, benefits and risks of corporate bonds with ASX's free online course.