- How are bonds different from shares?
- Who issues bonds?
- Which bonds can I buy through BrokerLine?
- How can I buy and sell bonds through BrokerLine?
- How much does it cost to trade bonds?
- How can I transfer bonds into my BrokerLine account?
- How do interest rates affect bonds?
- How do credit ratings affect bonds?
How are bonds different from shares?
Bonds can be less volatile than shares and ordinarily pay a steady stream of income.
Who issues bonds?
The main issuers of bonds are governments, companies and supranational institutions such as the European Investment Bank and the World Bank.
Which bonds can I buy through BrokerLine?
BrokerLine enables you to invest in more than 200 investment-grade bonds. This includes all UK government bonds (gilts) and European Investment Bank (EIB) bonds as well as a range of corporate bonds.
How can I buy and sell bonds through BrokerLine?
Place your order for bonds by calling our dealing line on 0870 600 4080. We'll then get you the best price and deal. We'll confirm your transaction on the phone and update your account details and holdings.
How much does it cost to trade bonds?
The usual BrokerLine fees and charges apply to bond transactions.
How can I transfer bonds into my BrokerLine account?
Call us on 0870 600 4080. If you hold a bond that we can trade, then simply complete a Crest transfer form and send it to us along with the bond.
How do interest rates affect bonds?
When interest rates rise, bond prices fall, and when interest rates fall, bond prices rise. Bonds are often called 'fixed-interest securities'. This is because the borrower usually pays a fixed amount of interest. But the price of bonds moves as the economy changes. To find out how much you'll make from the bond, or the bond's 'income yield', divide the fixed interest rate by the price you paid for it.
If you buy a bond above its issue price, you'll suffer a capital loss if the bond is held until redemption. But if you buy a bond below its issue price, you'll make a gain.
How do credit ratings affect bonds?
The lower a bond's credit rating, the higher the risk and the more return you can expect. Standard & Poor's and Moody's are two credit rating agencies that analyse the creditworthiness of a security. Ratings are reviewed regularly and can change. Here are the different ratings, or 'investment grades':
| Standard & Poor's | Moody's | |
|---|---|---|
| High quality | Aaa | AAA |
| Best quality | Aa | AA |
| Upper middle grade | A | A |
| Medium grade | Baa | BBB |