Bank Bonds: Definition and Overview
Bonds are offered by many different types of organizations that need to borrow money in order to complete ongoing operations.
Corporate bonds, for example, are bonds offered by large corporations to consumers.
Bank bonds are bonds that are issued by banks.
As with any type of bond, bank bonds are a debt instrument. The investor loans some of his or her money to the borrower, who agrees to repay the debt when the bond comes to term, which is usually several years down the road.
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Most of the major banks in the United States offer bonds.
Bank of America, J.P. Morgan Chase, Wells Fargo, and Goldman Sachs, for example, all offer bonds.
Like any bond product, the value of investing in bank bonds depends on the trends within the given industry at the time of purchase and throughout the life of the bond.
Foreign banks also offer bonds which may be of interest to investors, depending on the international climate and the strength of the particular bonds in question.
Bank bonds are becoming a more secure investment because of the increased regulation on the banking industry.
After the large bank failures of the last recession, regulations have changed to force banks to be more responsible and secure operations. This has resulted in a more stable and credit-worthy bank bond market.
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