Bonds and commercial paper are investment alternatives that have received greater attention during periods of economic recession.
The reason for this is that prices rise with falling interest rates (and vice versa), and there has long been a clear link between falling share prices and rising bond and commercial paper prices.
Financial expertise in this field has improved in recent years. This has contributed to the establishment of more complex structures that no longer solely link bonds and commercial paper to interest rate fluctuations in the market. The focus has thus shifted more towards credit ratings and option elements linked to the issuer, and securities issued in their name.
Bonds and certificates are both defined as loans treated as negotiable securities. The aim is to spread the debt across several investors instead of borrowing money from the bank, while creating an efficient secondary market for promissory notes. This kind of solution makes it possible to sell unwanted credits and maturities, and, if applicable, take on new risk in desired credits and maturities. Most bonds are listed on stock markets and traded through banks or through private brokerage firms.
» See also Debt Capital Markets