Evan Metcalf

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78 appearances 1 recordings 1 series first heard Jun 2022 last heard Jun 2022

Evan Metcalf’s voice in public audio — every appearance, attributed to the second.

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Australian Finance Podcast · Bonds 101: how to invest in bonds & what to look out for · 22 Jun 2022 podcast

I mean, the total...

Global bond market, corporate, government, the whole range is something like 120 trillion US dollars, which I think a lot of people would be surprised.

It's actually bigger than the global equity market, which is somewhere probably just south, I think, at the moment, based on recent performance, south of 100 trillion.

So, yeah, it's absolutely massive and completely critical to the way financial markets work around the world.

So it's how companies borrow.

It's how companies finance their activities.

So in terms of the flow of capital around the world and getting it into the right places, there's effectively two options.

You can either

raise equity capital, which as a business owner, that effectively means selling part of your business.

And then your investors on the other side are therefore effectively taking the risk that your business does well at some point in the future.

The other option, which is obviously very, very common and very highly used around the world is borrowing.

So you borrow money and most people do that via the bond market.

You can do it via a bank, but bank financing is relatively limited in its appeal.

So most of the big corporates, governments, semi-government type institutions, state governments, those sort of things, most of the financing and the funding for their activities is run through the bond market.

So that's investors who are effectively buying these securities.

They are really lending money to these institutions to effectively run their businesses.

So I think unlike equities where you invest a certain amount and you wait and see what the return is and what the dividends are over the life of the investment,

and where you sell, when you choose to sell, that determines your overall yield or your return on your investment.

With bonds, it's a little bit different because it's the end payment that's the known quantity.

So you know if you buy $100 face value of a particular bond in, say, 10 years' time, when that bond matures, you're going to get $100.

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