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Guaranty Trust Bank's introduces Bond trading service.

Bond Basics

A bond is a debt security, similar to an I.O.U. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as the issuer. In return for the loan, the issuer promises to pay you(investor) a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it "matures," or comes due.

For example, say you buy a bond with a face value of N1,000,000, a coupon of 12%, and a maturity of 5 years. This means you'll receive a total of N120,000 (N1,000,000*12%) of interest per year for the next 5 years. Actually, because most bonds pay interest semi-annually, you'll receive two payments of N60,000 a year for 5 years. When the bond matures after five years, you'll get your N1,000,000 back.

Frequently Asked Questions on Bonds